Deer Jet for sale as over-extended HNA Group looks for cash

HNA Group is looking to sell Deer Jet, the largest business jet operator in China. The Chinese airline-to-hotel conglomerate is looking to raise cash to repay debt due in 2019.

The company had hoped to sell Deer Jet for RMB3 billion ($431 million) but is now looking to split up the business and sell its owned aircraft fleet and eight FBOs.

Asian Sky Group, the Hong Kong-based business aviation consultancy, says that Deer Jet had a fleet of 57 private jets at the end of 2017 – although not all of these are owned. Some 37 of them are Gulfstream aircraft.

HNA Group is also in talks to dispose of Hongkong Jet. Hongkong Jet acquired local rival AsiaJet in 2016. It also owns Business Aviation Services Guernsey which holds an Air Operators Certificate (AOC) in Guernsey, in the English Channel. Business Aviation Services Guernsey owns 2-DEER the first Boeing VVIP 787. This aircraft is also for sale.

HNA Group also acquired a majority stake in Dubai-based trip-support company UAS. Although the amount of the investment was never made public, a post on a Chinese website in September 2018 suggested that the shares that it owned had already been transferred to a Beijing helicopter operator.

As well as its business aviation assets, HNA Group has also divested from its commercial aviation assets, selling 40% of its controlling 70% stake in Urumqi Airlines to the local government, cancelling its 60% purchase of Chongqing Western Airlines and completely selling off its wholly owned Lucky Airlines.

HNA’s chairman Chen Feng said earlier in November that the group had already sold assets worth Rmb300bn ($43bn) this year. The sales included high-value properties, but also included the sale of a 30% stake in aircraft lessor Avolon and its stake in the Hilton Hotel Group.

Further sales are expected to take place shortly, with its 7.6% stake in Deutsche Bank expected to raise around $10 billion.

Although the HNA Group had been growing rapidly, the Chinese government introduced new measures in July 2017 that limited Chinese banks from lending it money. The measures were put in place to curb the group’s foreign investments, as there were already concerns about the amount of debt that the company had built up.

Deer Jet did not return emails asking for comment.