Wuxi state-owned firm moves to buy Yunnan-based carrier, throwing Hong Kong Airlines discussions in doubt

Wuxi Communications Industry Group signs framework agreement to buy unspecified stake in Yunnan province’s Ruili Airlines

Deal could reduce the incentive for Wuxi to buy the troubled Hong Kong Airlines

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The majority owner of Yunnan-based Ruili Airlines is selling a stake to a company owned by Wuxi city. Photo: Weibo

Published: 9:09pm, 5 Aug 2020Updated: 12:56am, 6 Aug 2020

A company owned by Wuxi government plans to buy a stake in Ruili Airlines, giving the city and the eastern Chinese province of Jiangsu their first home-based carrier. The move could however spell the end of discussions on the possible sale of Hong Kong Airlines to a consortium that includes the state-owned enterprise.

Wuxi Communications Industry Group signed a framework agreement with Yunnan Jingcheng Group on Tuesday to buy shares in Ruili Airlines, marking the first step in the group’s acquisition of the privately held Yunnan-based carrier, the company said on its website.

Wuxi Communcations’ announcement did not specify the deal amount or the size of the stake it plans to buy. Yunnan Jingcheng owns 70 per cent of Ruili Airlines, according to data from Wind Information.

Wuxi’s talks with indebted aviation-to-finance conglomerate HNA Group to buy a stake in Hong Kong Airlines, the third largest carrier in the city, failed to make progress after on-and-off talks that started more than a year ago. As debt payment pressure mounts, Hong Kong Airlines’ hopes for a white knight to keep it afloat are fading as the coronavirus pandemic delays the troubled carrier’s recovery.

HNA Group has been looking to sell Hong Kong Airlines for over a year now. Photo: Winson Wong

Chinese authorities would have preferred Wuxi to buy Hong Kong Airlines, but Wuxi balked at the price, with more potential buyers conducting due diligence this year, sources said earlier.

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