HNA - “Where There’s Smoke, There’s Fire?”

The Chinese conglomerate, the HNA Group which has holdings in among others are airlines, handling agents, real estate, tourism and financial services, is back again in the news. There are new reports that HNA is ‘now’ finally going to sell off a part of their aviation related sector.
The step to reorganize their finances comes after Beijing put the thumbscrews on the debt-ridden Chinese conglomerate to reduce their high liabilities which have arisen from risky acquisitions.

Swiss holdings to come under the hammer
There was much discussion over the past twelve months as to whether HNA were going to divest themselves of their ground handling and catering activities in Europe. This was strongly denied by the company in the past as the Group faced continued financial problems within their massive portfolio and Chinese government demands to get their house in order.
It has been rather quiet on that front during the past four to five months.
But, late last week reports came up in the Swiss media that the decision has now been (finally) made to sell off their holdings in Swissport, one of the world’s largest ground handlers, as well as SR Technics and the catering company Gategroup.

In need of cash?
This fact was apparent already last year when HNA Group sold off their stakes in various other companies. At that time, they vehemently denied any idea about divesting themselves of other aviation related parts of the group.
CargoForwarder Global questioned this already last year and was met with a rather unfriendly or aggressive answer when we questioned the feasibility of Germany’s Hahn Airport being able to survive if HNA pulled out of Swissport, Gategroup or SR Technics.
The combined value of all three companies in question is quite large and could, if sold off properly, generate large amounts of much needed cash for HNA. Reports indicate that Swissport of which HNA owns 100 percent could still be sold off to Canada’s equity house, Brookfield and the Gategroup could now end up with another equity group. The reports indicate that so far the only one without a buyer in view is SR Technics.

Where will this leave Hahn?
The above question has been posed many times during the past twelve months and the answer has always been that HNA intends to invest in the airport and push further expansion.
However, so far, one does not see much of an investment there and in the meantime the passenger business has declined considerably, although air cargo movements have increased over the past year.
But, is this enough to keep HNA’s interest now in what many still see as a regional airport without a real future?
If HNA were to divest themselves of Swissport & Co., would it then still make sense to have an interest in a German airport? If so, for what reason?
Last week it to was made known that the HNA Group have now reduced their share in the Deutsche Bank to 6,3%. In February 2018 the original 10% share was reduced to 8,8% and in April of the same year, further down to 7,9%. Not a good sign!
Is the fire still smoldering, or will it flame up very soon?

John Mc Donagh