An acquisitive Chinese conglomerate is reportedly in talks about acquiring a stake in Monarch Airlines.
HNA Group, the owner of Hainan Airlines, has hired bankers to evaluate a possible acquisition of a large minority shareholding in Monarch, according to Sky News.
Such a deal would represent China’s biggest investment to date in a major UK airline.
Monarch is owned by private investment firm Greybull Capital, which took a 90% stake 18 months ago and has led a cost-cutting financial turnaround of the former loss-making business.
Greybull announced earlier this week that it had signed an outline deal to buy Tata Steel’s long-products division in the UK.
HNA’s interest in the UK leisure carrier is at an early stage, although the Chinese company has already held talks with the airline’s management team, according to people close to the situation, Sky News reported.
Bankers at Rothschild have been appointed to work for HNA, which this week agreed a $1.5 billion takeover of aviation catering group Gate Gourmet.
HNA already owns ground handler Swissport and is targeting further takeovers in aviation-related assets.
The likelihood of HNA sealing a transaction with Monarch remains unclear, partly because the European Commission caps the ownership of EU-based airlines by foreign entities at 49%.
Brussels has signalled that it is prepared to ease that restriction, while people close to Monarch say it should not deter HNA’s interest because of the potential to explore alternative structures for a deal.
A Greybull spokesman said: “Monarch has executed a successful turnaround, is now a strong and stable business and is therefore ready to look at growth opportunities in Europe.
“In order to review relevant options thoroughly, Monarch has sought the assistance of Deutsche Bank who will look at both inbound and outbound opportunities. We confirm there is no sale process.”
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