Hainan Airlines to invest $50 million in East Africa market

Hainan Airline, touted as the largest privately-owned air transport company in China, plans to enter the East Africa market with a $50 million investment.

The Shanghai Stock Exchange-listed HNA Group is the fourth largest airline in China and operates in 60 countries.

The airline signed an agreement with Astral Aviation Airlines Kenya on Saturday, which was one of the 17 MoUs signed at State House between Kenya and China.

Its entry is likely to shake up a market dominated with national airlines – Kenya Airways, Air Uganda, Air Rwanda and Ethiopian Airlines.

Besides the $50-million infusion, it will also be betting on its experience in the world’s most populous country to make its presence felt across East Africa.

HNA Group’s chairman Chen Feng, who was among the Chinese delegation that accompanied Premier Li Keqiang on his two-day visit, signed the agreement with Astral Aviation’s chairman Anwar Hussein.

A list sent from State House said the MoU concerns “cooperation in the aviation industry in Kenya and the wider East Africa region”.

HNA Group will enter into the region’s air transport sphere through “a partnership venture” with Astral Aviation, it said yesterday.

“The two companies are fine-tuning the final details before they begin the process to introduce airlines that will fly across the region and globally,” said source close to the deal.

Japheth Kisilu, chief executive of state-owned Consolidated Bank, and vice president of China-Africa Development Bank Lu QingCheng also signed the deal in what is seen as an opening to finance the joint venture in aviation.

It is not clear yet whether the two aviation companies will set up a separate special purpose vehicle to execute the partnership. The region’s air transport sphere is heating up as airlines become innovative, with Kenya Airways having introduced a low-cost subsidiary dubbed JamboJet.

UK’s low-cost airline FastJet is also eyeing the East and Central Africa region and is already operational in Tanzania.

In Kenya it operates under the banner of fly540. HNA Group’s net worth is estimated to be in excess of $134 billion (Sh11.67 trillion). Its interests are vested in aviation, airport management, real estate and townships development, banking and financial services, insurance, container and shipping logistics, tourism, and shopping malls.