HONG KONG (Reuters) - Shareholders summoned by Hong Kong Airlines this month for a meeting were greeted with some shocking news: the airline needed at least HK$2 billion in fresh funds or it would lose its operating license.
The carrier had lost HK$3 billion ($382.54 million) in 2018, they were told, and an infusion was crucial, according to people present.
Dialed in, but silent for the hour-long meeting on April 1, were executives for Hainan-based HNA Group,, which holds 29 percent of the airline’s shares.
Investors were blunt about HNA’s role in the company’s troubles, according to people at the meeting - including accusations that it was siphoning off cash, which the conglomerate denies.
“There’s no point raising fresh capital if we cannot solve the problem of (a) major shareholder pumping out HKA’s assets,” said Zhong Guosong, who holds 27 percent of the shares and is vying for chairmanship of the company.
Another shareholder echoed his views: “This is Hong Kong, not Hainan.”
In the last week, drama from the call has spilled into the open as HNA and a rival group battled for control of Hong Kong Airlines’ chairmanship. The airline declined to comment on shareholders’ activities and said its operations “remain normal.”
The infighting illustrates the convoluted nature of HNA’s holdings around the world, which range from real estate to banks and are often divided among opaque, related entities.
On paper, HNA gave up control of Hong Kong Airlines two years ago just as it began selling off assets collected in a $50 billion worldwide acquisition spree.
But the carrier has close ties with several HNA affiliates.
