COVID-19 recovery: Hainan Airlines’ recovery falters

China's domestic airline market is starting to recover.

But Hainan Airlines' domestic recovery has been choppy and the struggling carrier is only producing around 40% of the domestic seats compared to the same time last year - well below levels of its 'big three' Chinese rival carriers. Hainan Airlines is filing slower, more cautious resumptions of near term domestic flying and is the most pessimistic of the four largest airlines in terms of capacity deployment plans for the May Labor Day holiday period onwards.

Its parent, the HNA group has been confronting well publicised liquidity issues and on 29-Feb-2020 announced that the group's liquidity will be managed by a working committee comprising representatives from the Hainan Provincial Government, CAAC and China Development Bank as the coronavirus outbreak deters travel and impact the group's debt workout plan.

The weakened carrier recently held a conference with bondholders of its CNY750 million (USD106.4 million) bond, due on 17-Apr-2020, saying it is unable to repay the short term notes. It added it hopes to extend the repayment, noting that revenue had declined significantly due to the coronavirus pandemic.

For the formerly ambitious carrier, 2020 is proving to be an extreme challenge.