Hainan Airlines Group (HNA Group), China's 4th largest airline group, is still in the throes of its bankruptcy restructuring since last year. On October 13th, HNA Group issued an official document ordering its subsidiary, Air Gillian, to stop its pay cut plan.
The document was issued by HNA Group, addressed to Air Guilin, and copied to Guilin Transportation Investment Holding Group, wholly controlled by Guilin Government.
The document states that HNA Group knew Air Guilin' pay cut plan through "social media".
The document further states,
"the pay cut decision was not communicated with the HNA Group in any form in advance. Such policy has already affected the stability of the staff and had a negative impact on aviation safety. It ran counter to the Group's "three no reduction" policy and the concept of "never reducing the cost of manpower."
The document ordered Air Guilin to strictly implement the "three no reduction" policy and immediately stop the pay cut policy to ensure the stability of the staff and operational safety.
HNA Group's "three no reduction" policy is no reduction in the number of employees, no reduction in the salary of employees, and no reduction in the benefits of employees.
Who controls Air Guilin?
According to the company registration information, Guilin Transportation Investment Holding Group holds 60% of Air Guilin. Guilin Air Travel Group, a subsidiary of HNA Group, holds the other 40%.
The public information also shows the 60% shares of Air Guilin held by Guilin Transportation Investment Holding Group are now frozen under the court order.
It is reported that the court confirmed that the freeze of the shares was applied by the other shareholder, Guilin Air Travel Group.
HNA Group responded regarding the freeze application, claiming that Guilin Air Travel Group has 100% equity interest in Air Guilin, based on the effective legal ruling made by Hainan High People's Court on October 31st, 2021. Therefore, it is Guilin Air Travel Group's legal right to protect its interests, and the freeze will not affect the daily operation and operational safety of Air Guilin.
The personnel of the workgroup of HNA's reorganization disclosed that the Guilin Government did not actually fund some of its initial shares in Air Guilin.
However, before the HNA Group bankruptcy was completed, Air Guilin, in financial difficulties, once received financial support from the Guilin Government. The Guilin Government also planned to increase the capital and share percentage in Air Guilin, but was put to a halt due to the start of the reorganization of HNA Group.
All the backgrounds combined have led to the present dilemma. HNA Group considers it owns 100% of Air Guilin based on an effective ruling, while Guilin Government considers it's not fair to lose all its equity considering all the financial support and resources that have been put in.
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Operational safety risk due to escalating conflicts
Guilin Transportation Investment Holding Group set up a temporary Party Committee in Air Guilin months back to fully control the personnel appointments and financial books. It also demanded Air Guilin not participate in various meetings of the HNA Group.
This "no-communication" situation may be the reason why HNA Group could only know Air Guilin' pay cut plan through "social media".
However, the escalating conflicts may result in the hidden danger of Air Guilin' operations.
Previously, the technical operations of Air Guilin were managed by HNA Group. HNA Group is still responsible for the spares support and pilot management of Air Guilin. However, as the control issue stands and the Guilin Government gradually takes over the daily management, the question of who holds the operational safety responsibilities will become outstanding.
No CAAC involvement regarding the issue has been reported.
How do you think this conflict will be resolved? Please share your valuable thoughts with Simple Flying in the comments.