Fangda to sink ¥10.9bn more into China’s Hainan Airlines

Liaoning Fangda Group Industrial, controlling owner of Hainan Airlines Holding, has outlined plans to inject more cash into the loss-making carrier in a private placement to be issued to wholly-owned Fangda subsidiary Hainan Hanwei Investment, according to a series of Shanghai Stock Exchange filings. Hanwei will buy up to CNY10,870,393,700 yuan (US$1.6b) worth of shares (9,972,838,277 of them) in the Hainan Airlines (HU, Haikou) parent, the proceeds to be deployed “to supplement working capital”, the filings published late on August 11 said. Trading in Hainan Airlines Holding, which Fangda bought from failed conglomerate HNA Group last year, is limited due to risk of delisting, but the stock price rose on the news of the cash injection. The carrier, whose majority-owned subsidiaries include Shaanxi Changan Airlines Travel Co., Ltd., China Xinhua Airlines, Fuzhou Airlines, GX Airlines, Lucky Air (China), Shanxi Airlines, and Urumqi Air, said in January that it would ask the stock exchange to cancel the risk warning, a development it had disclosed in April 2021. But most of the carriers under the holding company have struggled this year to recover from the Covid-19 pandemic. Meetings of Hainan Airlines Holding’s board of directors and board of supervisors approved the cash booster on August 11, but it still needs to be reviewed and approved by the company’s general meeting of shareholders. The price per share for the issue is CNY1.09 (USD0.16), representing a discount of about 24% compared with the closing price the previous day.<br/>