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How HNA's Meteoric Rise Switched to Dramatic Downfall

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Photographer: Qilai Shen/Bloomberg

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China’s HNA Group Co. shot to international prominence by spending more than $40 billion on acquisitions across six continents from 2015. The once little-known airline operator became a major shareholder of Hilton Worldwide Holdings Inc. and Deutsche Bank AG as well as paying top dollar for high-end properties from Manhattan to Hong Kong. But the breathtaking buying spree prompted questions by regulators about its opaque ownership structure. And the focus soon shifted to HNA’s struggle to manage its spiraling debt, which has prompted a reversal of course and an equally dramatic selling spree.

HNA has repeatedly said they’re fine but the numbers tell a different story. The company doesn’t generate enough profit to cover its interest payments and its short-term debt soared to more than 185 billion yuan ($29 billion) in the first half of 2017, exceeding its cash reserves. The cracks widened last year as HNA needed to pay record prices for debt and canceled bond and share sales. Then this year there were missed payments to banks and shares were suspended in multiple HNA units. Even the flagship airline reportedly faced losing a fuel supplier over unpaid bills.