The Chairman and CEO of HNA Group, parent of Hainan Airlines and several other carriers, has been taken away by police.
The company, which was placed in bankruptcy administration in February after its creditors filed a petition, said in a statement on its official WeChat account it had been notified by police in its home province of Hainan, southern China, that Chairman Chen Feng and CEO Tan Xiangdong had been taken.
“The operations of HNA Group and its member companies are stable and orderly, and the bankruptcy and restructuring work is progressing smoothly according to the law,” the company said.
At one point HNA Groups holdings included:
- At least a portion of Chinese airlines such as Beijing Capital Airlines; Fuzhou Airlines; Hainan Airlines; HK Express; Hong Kong Airlines; Lucky Air; Tianjin Airlines; and Urumqi Air
- Stakes in international airlines such as Azul, Virgin Australia, South Africa’s Comair and TAP Air Portugal
- Interests in NH Hotels, Red Lion Hotels, Radisson Hotels, Swissport, ICE – International Currency Exchange, and Rio de Janeiro–Galeão International Airport
- Plus being the largest investor in Hilton
- Airline caterers Gate Group and Servair
These acquisitions entailed a mount of debt which the company couldn’t service even before $10 billion was embezzled.
Before the pandemic they worked to reduce a debt load that exceeded $100 billion by selling off assets, but continued to face problems paying for fuel, problems paying employees, and problems paying investors. HNA even offered investors airline airline tickets in lieu of interest payments.
They even turned off inflight entertainment systems because they couldn’t pay licensing fees. Seven of their grounded planes were seized by Hong Kong airport over unpaid fees. They entered bankruptcy with $75 billion owed even after selling off assets.
By the way the Chairman of Anbang Insurance, which nearly outbid Marriott to buy Starwood Hotels and then tried to buy IHG, was detained by the Chinese government back in 2017. Anbang was then taken over by the central government.
This despite Anbang’s Chairman being married to Deng Xiaoping’s granddaughter, and Anbang director Chen Xiaolu’s father being a military commander who served Mao Zedong. Oddly, Levin Zhu, son of a former Chinese Premier, had been listed as an Anbang director though he claimed he never agreed to be on the board.
On the one hand, then, the move against HNA’s Chairman appears to be the continuation of a long-standing crackdown on corruption by politically well-connected individuals insufficiently aligned with President Xi Jinping. On the other hand, the move now as the country unwinding malinvestment fueled by the nation’s high savings rates as it ran out of productive places to park the funds, along with a crackdown on ‘too powerful’ figures.