Source:
https://scmp.com/news/hong-kong/law-and-crime/article/3006791/factions-fighting-control-hong-kong-airlines-meet
Hong Kong/ Law and Crime

Factions fighting for control of Hong Kong Airlines meet to broker deal amid claims of office break-in and theft of documents

  • Self-proclaimed chairman Zhong Guosong says HNA Group representatives ‘stormed’ Hong Kong Airlines’ office and removed papers
  • However, carrier denies there has been any break-in or theft
Security guards are stationed outside the Hong Kong Airlines office in Tung Chung. Photo: Felix Wong

Two warring factions at Chinese conglomerate HNA Group laying claim to ailing Hong Kong Airlines met on Thursday to broker a peace deal, sources say.

But amid an increasingly acrimonious battle for control, there was a fresh twist to the drama involving airline shareholders – claims of a break-in on Thursday morning and the theft of financial documents, potentially pushing both sides further apart.

Hong Kong Airlines (HKA), the city’s third largest carrier, denied there had been any break-in or theft at its offices on Thursday.

HNA staff were said to have entered the office and removed papers, leading to accusations by the rival faction that the conglomerate was stealing financial documents.

Hong Kong Airlines is the city’s third largest carrier. Photo: Reuters
Hong Kong Airlines is the city’s third largest carrier. Photo: Reuters

On Tuesday, former HKA director Zhong Guosong claimed to have seized control of the carrier at an extraordinary general meeting of shareholders, joining forces with another party and proclaiming himself chairman.

But a day later, supposed chief Hou Wei assured staff in a memo that he was still at the helm of the financially fragile airline.

Zhong, through his public relations team FTI Consulting, said on Thursday: “HKA’s controlling shareholders confirm the reports that HNA Group representatives stormed HKA’s office this morning, and it is believed that financial information was taken away or destroyed in the process.”

In another FTI statement, Zhong accused HNA of serious financial impropriety.

In a separate incident, a video taken by Zhong’s team was said to show an individual – understood to be an external auditor – taking away reams of documents from the carrier’s offices in a suitcase on Tuesday.

Police said they received a report on Tuesday’s incident but believed it did not involve criminality, and had classified it as a dispute.

There was heavy security at the airline’s headquarters in Tung Chung on Thursday, including in the building’s shared lobby and outside the firm’s 11th-floor office.

HNA Group has a 29 per cent stake in Hong Kong Airlines. Photo: Reuters
HNA Group has a 29 per cent stake in Hong Kong Airlines. Photo: Reuters

Employees heading off for the Easter break declined to comment, except to insist all was well at the company.

In a statement, the operating company of HKA said: “As a private company, Hong Kong Airlines does not comment on its shareholding structure. However, we believe that our stakeholders will solve the issue in a professional and impartial manner.”

It acknowledged it hired third-party security and lawyers to aid in the dispute among shareholders.

HNA has remained silent despite repeated requests for comment.

At the centre of the fight is Hong Kong Airlines Co Limited, holding company of Hong Kong Airlines Limited, the air carrier business.

Hong Kong Airlines Consultation Service (HKACS), of which Zhong is sole director, and Chinese private equity firm Frontier Investment Partners, joined forces with 27 per cent and 34 per cent stakes in the airline’s holding company respectively. HNA has a 29 per cent share in the firm.

However, a source said Frontier had been sold, implying that control of its airline share was no longer in Zhong’s hands.

On December 31, HNA sued HKACS – putting Zhong in the line of fire – demanding repayment of HK$854 million in debt.

Zhong had a 48.6 per cent stake in budget carrier HK Express, which had a complex network of ties to various HNA parties.

The airline was sold to hometown rival Cathay Pacific Airways last month in a HK$4.98 billion deal which Zhong vigorously opposed. For HK Express shareholders, only HK$2.25 billion would be paid in cash while the rest would cover outstanding debts.