MIAMI — Hainan Airlines, part of HNA Group, has begun to sell all of the 19.3 million shares it holds over Brazilian carrier, Azul, representing a $320 million trade based on current market rates.
“The offering is part of Hainan’s strategic plan, which includes capital raising initiatives, selected divestments, as well as investments in airlines and in the aviation services sector,” explained Azul in a public statement.
The Chinese conglomerate, which owns 17% of Azul, has decided to release its shares following an increase in its outstanding debt.
Currently, HNA has stakes in Aigle Azur, Azul, Comair, MyCargo Airlines, TAP Portugal, Virgin Australia, and leasing company Avolon, among others.
The conglomerate also owns Hong Kong Airlines and numerous aviation-related ventures, such as Frankfurt-Hahn Airport and handling company Swissport.
“Azul and Hainan do not expect the offering to result in any material change to the strategic plan or commercial relationship between Azul and Hainan,” said the Brazilian carrier in today’s statement.
The origins of the investment
In 2015, United Airlines (UA) invested $100 million in Azul, acquiring 5% of its total outstanding shares.
In the same year, the HNA Group followed with a larger $450 million purchase, which represented a 23.7% stake in Azul.
At the time, Azul’s CEO, David Neeleman, saw HNA’s investment as a demonstration that Azul had a “winning business model.”
Initially, Azul had ordered five Airbus A350s for its long-haul fleet. However, the HNA Group decided to keep these planes and Azul moved forward with the A330neo, which will be delivered to the airline before the end of this year.
Both Azul and the HNA Group later put their eyes on TAP Portugal, making a $100 million investment for a 40% stock in the Portuguese carrier.
It is unclear whether the HNA Group will also sell its stake in the Portuguese flag carrier.
With today’s announcement that HNA will be selling its shares, Azul states that “Hainan will no longer have the right to appoint any directors to Azul’s board of directors.”
The outlook for Azul remains calm as the carrier continues to outperform its competitors and patiently awaits for the entry into service of its first A330neo.