Report by : Gan Yung Chyan
/ KUCINTA SETIA
Distributed to All Press & Travel Professionals
HNA Group Co., Ltd. (hereinafter referred to as HNA Group) has determined the new development tone of “focusing on aviation as its main business” under the pressure of huge debt repayment. This includes the disposal of many local aviation enterprises, and the sale of these enterprises to obtain more money has become its only way of company survival.
After giving up the controlling stake in Urumqi Air to the Urumqi Municipal Government, it is said that Capital Airlines, short for Beijing Capital Airlines, is the next airline to be sold by HNA to Beijing Municipal Government.
On 12 December 2018, HNA Group announced that it has signed the "Framework Agreement on Strategic Cooperation of Beijing Capital Airlines Co., Ltd." with Beijing Capital Tourism Group Co., Ltd. (hereinafter referred to as BTG Group). Capital Airlines said that according to the new cooperation agreement, the two parties will increase their support for Capital Airlines through equity transfer, capital increase and share expansion, etc., and BTG Group will become one of the major shareholders of Capital Airlines.
In fact, the news about the negotiation between the BTG Group and Capital Airlines on the equity transfer has already been circulated in the industry. Previously, people familiar with the matter disclosed to the China Times reporter that HNA Group intends to completely withdraw from Capital Airlines and transfer the entire equity to BTG Group. However, there have been no new developments in the future of Capital Airlines in the past few months.
Even if the cooperation framework agreement was officially signed, the changes in the final shareholding ratio of Capital Airlines were not disclosed. More interestingly, in the evening of 11 December 2018, the media received a notice that the signing of the signing conference had been cancelled, but the next day they were notified that the press conference would proceed as usual. It can be seen that even if the two sides shake hands and say that they will cooperate with each other, there is obviously still a lot of disagreement to be resolved in the course of this transaction. However, it is likely that the latest shareholding ratio is not finalized but it is urgent to pass this. A transaction conveys a gesture of expediency to the outside world.
In fact, Capital Airlines itself was restructured based on Deer Air, a subsidiary of HNA, by the Beijing Municipal Government in 2010. A number of local aviation enterprises have been quickly established, forming a “HNA” enterprise matrix, and even the industry has dubbed HNA the self-organized aviation alliance.
BTG Group is a company that participates in the formation of Capital Airlines on behalf of the Beijing Municipal Government. It holds a 30 per cent stake in Beijing Capital Airlines Holdings Co., Ltd., the controlling shareholder of Capital Airlines. It is estimated that the equity of Capital Airlines currently held by BTG Group should be less than 20 per cent.
According to relevant sources, after the capital increase and expansion, the BTG Group may eventually hold more than 40 per cent of the shares of Capital Airlines, thus surpassing HNA Group as the single largest shareholder.
Capital Airlines now owns 85 aircraft, operates more than 400 routes to more than 70 local and foreign cities. The routes it has implemented cover major cities in the first and second tiers of the country, and have market advantages in parts of Yunnan, Hainan and eastern China. The airline network covers medium-sized cities in Europe, North America, Oceania, Japan, South Korea and Southeast Asia, with an annual passenger throughput of more than 15 million passengers. It has also obtained the qualification to operate at Beijing Daxing International Airport.
According to the new cooperation agreement, after the equity adjustment, Capital Airlines still implements the professional management of air transportation, which is also crucial for the BTG Group, which has no experience in aviation industry operations. Previously, the local government introduced HNA Group to cooperate in the aviation industry. One important aspect is that it is a partner of the aviation industry and has its own advantages in professional operation and management.
According to people close to HNA Group, Capital Airlines is only one step of HNA Group's gradual removal of control of local aviation companies. Next, there will still be similar modes of operation, including Lucky Air of Yunnan and Nanning-headquartered Guangxi Beibu Gulf Airlines (GX Airlines, in short).
"The HNA Group may eventually return to the state of operating Hainan Airlines only. The best result is for HNA to solely concentrate on developing Hainan Airlines as the local aviation company of Hainan Province," said a person close to HNA Group.
/ KUCINTA SETIA
Distributed to All Press & Travel Professionals
HNA Group Co., Ltd. (hereinafter referred to as HNA Group) has determined the new development tone of “focusing on aviation as its main business” under the pressure of huge debt repayment. This includes the disposal of many local aviation enterprises, and the sale of these enterprises to obtain more money has become its only way of company survival.
After giving up the controlling stake in Urumqi Air to the Urumqi Municipal Government, it is said that Capital Airlines, short for Beijing Capital Airlines, is the next airline to be sold by HNA to Beijing Municipal Government.
On 12 December 2018, HNA Group announced that it has signed the "Framework Agreement on Strategic Cooperation of Beijing Capital Airlines Co., Ltd." with Beijing Capital Tourism Group Co., Ltd. (hereinafter referred to as BTG Group). Capital Airlines said that according to the new cooperation agreement, the two parties will increase their support for Capital Airlines through equity transfer, capital increase and share expansion, etc., and BTG Group will become one of the major shareholders of Capital Airlines.
In fact, the news about the negotiation between the BTG Group and Capital Airlines on the equity transfer has already been circulated in the industry. Previously, people familiar with the matter disclosed to the China Times reporter that HNA Group intends to completely withdraw from Capital Airlines and transfer the entire equity to BTG Group. However, there have been no new developments in the future of Capital Airlines in the past few months.
Even if the cooperation framework agreement was officially signed, the changes in the final shareholding ratio of Capital Airlines were not disclosed. More interestingly, in the evening of 11 December 2018, the media received a notice that the signing of the signing conference had been cancelled, but the next day they were notified that the press conference would proceed as usual. It can be seen that even if the two sides shake hands and say that they will cooperate with each other, there is obviously still a lot of disagreement to be resolved in the course of this transaction. However, it is likely that the latest shareholding ratio is not finalized but it is urgent to pass this. A transaction conveys a gesture of expediency to the outside world.
In fact, Capital Airlines itself was restructured based on Deer Air, a subsidiary of HNA, by the Beijing Municipal Government in 2010. A number of local aviation enterprises have been quickly established, forming a “HNA” enterprise matrix, and even the industry has dubbed HNA the self-organized aviation alliance.
BTG Group is a company that participates in the formation of Capital Airlines on behalf of the Beijing Municipal Government. It holds a 30 per cent stake in Beijing Capital Airlines Holdings Co., Ltd., the controlling shareholder of Capital Airlines. It is estimated that the equity of Capital Airlines currently held by BTG Group should be less than 20 per cent.
According to relevant sources, after the capital increase and expansion, the BTG Group may eventually hold more than 40 per cent of the shares of Capital Airlines, thus surpassing HNA Group as the single largest shareholder.
Capital Airlines now owns 85 aircraft, operates more than 400 routes to more than 70 local and foreign cities. The routes it has implemented cover major cities in the first and second tiers of the country, and have market advantages in parts of Yunnan, Hainan and eastern China. The airline network covers medium-sized cities in Europe, North America, Oceania, Japan, South Korea and Southeast Asia, with an annual passenger throughput of more than 15 million passengers. It has also obtained the qualification to operate at Beijing Daxing International Airport.
According to the new cooperation agreement, after the equity adjustment, Capital Airlines still implements the professional management of air transportation, which is also crucial for the BTG Group, which has no experience in aviation industry operations. Previously, the local government introduced HNA Group to cooperate in the aviation industry. One important aspect is that it is a partner of the aviation industry and has its own advantages in professional operation and management.
According to people close to HNA Group, Capital Airlines is only one step of HNA Group's gradual removal of control of local aviation companies. Next, there will still be similar modes of operation, including Lucky Air of Yunnan and Nanning-headquartered Guangxi Beibu Gulf Airlines (GX Airlines, in short).
"The HNA Group may eventually return to the state of operating Hainan Airlines only. The best result is for HNA to solely concentrate on developing Hainan Airlines as the local aviation company of Hainan Province," said a person close to HNA Group.
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