Hainan Group has secured a CNY4 billion ($569 million) joint loan to pay the daily operating costs of the company and its affiliated airlines, the group has revealed.
The loan for Hainan Group, which has run into serious financial debt over the past few years, will consist of a syndicate of eight banks which have signed a joint credit agreement with each lending $71 million.
Media outlet Yicai Global has reported that the lenders include two major policy banks, China Development Bank and China Exim Bank, Industrial and Commercial Bank of China and five of the country’s other largest commercial banks. HNA, its founder Chen Feng and CEO Tan Xiangdong will stand as guarantors.
The agreement is for a three-year loan, which bears unalterable 4.75% fixed annual interest. The loan will be used to pay for aviation fuel and materials, take-off and landing fees, wages, aircraft rentals and other operating expenses of the company and its affiliated airlines, per the statement.
At this moment it is unclear if any of the funds will go to troubled sister carrier Hong Kong Airlines, which is facing an ultimatum placed by the Hong Kong Air Transport Licensing Authority (ATLA) to improve its finances or risk its operating license be suspended.
The airline has been suffering financially for several months now and needs a cash injection to keep operating.
ATLA will announce its decision by December 7, 2019.