- Hainan Airlines Holding (600221.SS) has plans to acquire a 20.14% stake in Chinese airline Lucky Air for RMB 1.87 billion , according to Sohu.
- After the deal, Hainan Airlines Holding will hold a 70.19% stake in the target company.
Why It Matters:
- Lucky Air is a low cost airline based in Yunnan Province, China. Hainan Airlines invested RMB 2.93 billion in the company back in 2004 and plans to increase its control over the company through the purchase of the new stake.
- By the end of 2016, Lucky Air recorded RMB 12.2 billion in total assets and RMB 4.7 billion in net assets. The airline’s revenue and net profit for 2016 were RMB 4.97 billion and RMB 459 million respectively.
- Hainan Airlines Holding has fallen into financial trouble as its political connections and alleged scandals involving former top leaders of the company have been revealed by overseas media. The ultimate political decision has not yet been made, but the state-owned Chinese banks have already renewed their credit lines with Hainan Airlines.