(Feb 21): China plans to take over indebted conglomerate HNA Group and sell off its airline assets, the most dramatic step to date by the state to contain the deepening economic damage from the deadly coronavirus outbreak.

The government of Hainan, the southern island province where HNA is based, is in talks to seize control of the group after the contagion hurt its ability to meet financial obligations, according to people familiar with the plans. The once little-known airline operator shot to prominence between 2016 and 2017 after a debt-fuelled acquisition spree saw it become the leading shareholder of iconic companies such as Hilton Worldwide Holdings and Deutsche Bank, while paying top dollar for properties from Manhattan to Hong Kong.

China is under growing strain from the shutdowns imposed to curb the coronavirus, which has killed more than 2,000 people. As President Xi Jinping seeks to prevent the short-term economic pain from turning into a slump that outlasts the contagion, his government is considering direct cash infusions or mergers to stabilize the hobbled airline industry, while the People’s Bank of China said it will work on supporting domestic consumption. A takeover of a high-profile company like HNA would take those efforts to a new level.

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