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Interview

HNA will return to airline roots and dispose assets, chief says

Chinese group aims to transform from sprawling, debt-laden conglomerate

China's HNA Group has been unloading assets such as its shares in hotel operator Hilton Worldwide Holdings.   © Reuters

CHONGQING -- HNA Group, the heavily leveraged Chinese conglomerate, has embarked on a divestment campaign with the singular purpose of returning to its airline roots, the group's head told Nikkei.

"We are not simply selling off assets," Chairman Chen Feng said in an interview Monday. "We are disposing assets for the purpose of concentrating on the core aviation business."

Chen, who spoke on the sidelines of the Asia-Europe Leaders' Cooperation Dialogue here, cited several ways the sprawling group can reorganize itself.

"There are such things as joint operations and debt-to-stock conversions," he said. "Moving forward, HNA will continue to concentrate on the aviation business and strengthen core operations."

Hong Kong Airlines, one of HNA's core companies, intends to suspend routes to cities such as Vancouver and Ho Chi Minh City as the continuing protests in Hong Kong depress travel to the territory and strain the carrier's business.

HNA Chairman Chen Feng speaks Dec. 3 at the Asia-Europe Leaders' Cooperation Dialogue in Chongqing. (Photo by Shunsuke Tabeta)

HNA engaged in high-profile purchases during 2016 and 2017, such as taking large stakes in Deutsche Bank and Hilton Worldwide Holdings. The group also bought offshore real estate and Singaporean logistics firm CWT.

But HNA soon encountered tougher oversight by Chinese authorities, who were concerned with the nearly $100 billion in debt accrued by the group. The conglomerate switched from a top global buyer of assets to a seller, shedding shares in Deutsche Bank and Hilton, among other offshore holdings.

Chen declined to answer questions about whether HNA will continue to unload assets, or regarding the group's current debt level.

Chen, a co-founder of HNA, is considered close to Chinese Vice President Wang Qishan, one of President Xi Jinping's top allies. In October, HNA promoted Chen's son, Chen Xiaofeng, to president of the group.

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