Juneyao Air (HO, Shanghai Hongqiao) is establishing an investment company together with strategic investors as a means of investing in other airlines, it revealed in a stock exchange disclosure. Anonymous sources told the financial news site Caixin that the new firm intends to bid for assets owned by bankrupt HNA Group.
Existing subsidiary Shanghai Juneyao Aviation Investment Co. and the unnamed strategic investors, with which Juneyao Air said it had a long partnership, will set up the new Shanghai Jidaohang Aviation Technology Partnership Enterprise, which will have a start-up capital of up to CNY30 billion yuan (USD4.63 billion), the filing said.
The April 29 disclosure did not name the airlines the new firm would be targeting. The sources told Caixin that Juneyao was cautious about any potential acquisition of assets belonging to ailing Chinese conglomerate HNA and that a deal would depend on conditions being adhered to on both sides.
Juneyao Air cautioned in its filing that even if its investments in airlines prove successful, they would probably take a long time to pay off and returns may not reach expected levels.
Embroiled in a court-led bankruptcy and restructuring process, HNA Group said in March that it had started to hunt for investors for its flagship carrier Hainan Airlines (HU, Haikou) as well as various aviation holdings. The investment opportunities include:
- HNA Group itself;
- Hainan Airlines;
- Shanxi Airlines (Taiyuan);
- Fuzhou Airlines (FU, Fuzhou);
- Air Changan (9H, Xi'an Xianyang);
- Urumqi Air (UQ, Urumqi);
- China Xinhua Airlines (Beijing Capital);
- Lucky Air (China) (8L, Dali);
- GX Airlines (GX, Nanning).
The administrators have affixed conditions to any acquisition, such as that the airlines’ bases, brands, and licences, as well as partnership agreements with Hainan Airlines, must be kept intact. Local state-owned shareholdings must not change and the airlines must continue to participate in local economic and social development.
According to Caixin, other private companies are also bidding for HNA’s airline assets but it did not name them. However, on April 30, unnamed sources told Bloomberg News that Fosun Group, a conglomerate headquartered in Shanghai and incorporated in Hong Kong, and a company owned by ENT!JDCO, China’s biggest online retailer, were among those considering such an investment. Air China (CA, Beijing Capital) and Ping An Insurance Group Co. have also reportedly been examining the assets. Any deal could raise billions of dollars, the sources said.
Last week, Hainan Airlines posted a net loss of CNY64 billion (USD9.9 billion) for 2020, while Juneyao Air reported a CNY485.5 million (USD75 million) net loss for the year.
Juneyao Air had not responded to ch-aviation’s request for comment at the time of going to press.
