Hainan Airlines – the principle business of the HNA group is facing a cash crisis following the collapse of the Initial Public Offering for Swiss Gategroup, the airport and airline servicing company.
Hainan was expecting to raise $1.4 billion from the sale of 65% of its stock on the open market. However, just before the stock sale was due to go live, bankers managing the sale realised they would never be able to raise the money required and that the shares were priced wrongly.
This was a quick win for the airline group and its loss is bad news. Even though the airline made a technical profit last year, its financial situation remains precarious.
The group is trying to sell property worth $2.2 billion in Hong Kong, but buyers don’t want to pay full price at a distressed sale. It’s sold most of its DeutchBank holdings and is trying to sell its hotels portfolio.
Hainan Airlines owes nearly a billion dollars alone in fuel costs for the last 5 months, although it has started payments – it was given a March 18 deadline or face termination of its fuel supply.