HNA Group eyes greater global market in air industry
HNA Group, the parent company of Hainan Airlines, has long been regarded as a miracle, even in China's overall growth story. Its chairman Chen Feng sounded bullish on Thursday about the group's prospects in the global marketplace.
"We will soon start to fly to our second city in the US – Chicago," Chen told the 2013 Leadership and Business Conference, sponsored by the International Leadership Foundation and Coalition of Asian American Business Organization.
The Beijing-Chicago route will be HNA's second route to the US after its direct Beijing-Seattle service, which started in 2008. The company says it has a 48 percent market share of the route.
"I started as a 'briefcase company' (meaning in Chinese 'on a shoestring') and in 20 years have built Hainan Airlines into a world-class airline," Chen told the audience, which included former US Labor Secretary Elaine Chao, local business and civic leaders and dozens of students.
Chen said he was especially proud of expanding the airlines into a conglomerate, with businesses in tourism, logistics and financial services. HNA also joined the Fortune 500 list last year.
Talking about the company's ambitious plans for the global market earlier this year, Chen said he has noticed for years that many foreign companies have been offering their assets and equities at much lower prices than before.
"HNA has accelerated its pace to implement its 'Going Global' strategy since the global financial crisis of 2008," he said.
"Globalization is the way we must go in order to become an enterprise with world-class excellence," Chen told reporters months ago. "M&A will continue to be an important strategy for our future growth."
He said on Thursday that following his recent deal with NH Hotels in Spain, HNA will have more than 500 hotels, including their original 80 hotels in and outside of China.
In April, HNA secured a 20 percent stake in NH worth $306 million. NH specializes in accommodations for budget-minded business travelers and operates about 400 hotels in 26 countries. The Spanish hotel group ended last year with a net loss of $385 million, compared with an $8 million net profit a year earlier, according to media reports.
Chen also discussed buying GE SeaCo, which he called an excellent company. In 2011, HNA acquired the GE subsidiary, the world's fifth-largest container leasing firm, for $1.05 billion.
Chen said he asked the GE chairman why they sold such a great company. "After I told him the developments of the company since our acquisition, he said, 'you have done a better job than us'," Chen said, with a tone of pride in his voice.
HNA's massive M&A efforts also included its $27 million acquisition of ACT Cargo Airlines in Turkey in 2011.
Last year, HNA teamed up with the China-Africa Development Fund to establish an aviation company in Ghana. In the same year, it purchased a 48 percent stake in Aigle Azur Transports Aeriens, the second-largest airlines in France.
Just a month ago, HNA announced that it had agreed to acquire GE Capital's TIP Trailer Services, a European market leader of transport equipment leasing, rental and service solutions, subject to customary closing conditions, including regulatory approvals.
TIP Trailer Services will operate a network of 48 branches throughout 16 European nations, with more than 100 rental locations, once the deal closes.
Chen did not mention this particular deal at Thursday's meeting, but he believes the global financial crisis has provided good opportunities for M&A deals and said HNA has also acquired some good companies in the US in the last two years, including hotel and office buildings.
"The exchange between China and the US has become so close, I think the future will be an era of China-US exchanges," Chen said.
HNA had revenues of more than $19.3 billion in 2012 and its total group assets reached $60.8 billion, a 38,000 percent increase over 20 years.
SOURCE: China Daily
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