© Reuters. A HNA Group logo is seen on the building of HNA Plaza in Beijing

By Gabriel Crossley and Zoey Zhang

BEIJING (Reuters) – HNA Group has asked the government of China’s province of Hainan to lead a work group dedicated to resolving its increasing liquidity risks after a slowdown in business caused by the coronavirus outbreak.

HNA Group is not able to thoroughly deal with liquidity risks itself, the company said in a post on its official WeChat account on Saturday.

HNA directly owns or holds stakes in a number of local Chinese carriers, including Hainan Airlines (SS:), and is among many companies pressured by the coronavirus outbreak that has forced widespread flight cancellations.

The work group is being led by Gu Gang, chairman of Hainan Development Holdings Co., an investment arm of the government of the southern province, the WeChat post said.

Officials from the Hainan Yangpu Economic Development Zone, the Civil Aviation Administration of China’s Central and Southern (NYSE:) Regional Administration and China Development Bank are also involved in the work team, HNA said.

There have been news reports that the Chinese government may take over HNA and sell off its airline assets because the coronavirus outbreak has reduced the conglomerate’s ability to meet its financial obligations.

State carriers Air China (HK:) (SS:) and China Eastern Airlines (HK:) (SS:) are prepared to hold talks about HNA’s assets, a source with direct knowledge of the matter said on Feb. 20.

HNA Group was once one of China’s most aggressive dealmaking firms, having spent $50 billion on global acquisition spree that once spread from Deutsche Bank (DE:) to Hilton Worldwide.

However, it began unwinding those purchases two years ago to shift focus to its airlines and tourism businesses, after drawing scrutiny from Beijing and other overseas regulators.

In December, before the coronavirus epidemic hit China, HNA Chairman Chen Feng admitted that the firm had faced cash flow shortages that forced it to delay some salary payments in 2019, but vowed to resolve its liquidity risks this year.

Since the outbreak, Hainan Airlines and other airlines have tried to cut their losses by putting foreign pilots on unpaid leave, but they still need to refund millions of passengers and face plummeting demand.

In a separate statement on Saturday, HNA Group also said it will add two more seats to its existing five member board of directors, with Hainan Development’s Gu becoming its executive chairman. Co-founder Chen Feng will remain the board’s chairman.

Ren Qinghua, director of the Administrative Committee of Yangpu Economic Development Zone, was also appointed to the board and will become co-CEO alongside Tan Xiangdong, HNA Group’s existing CEO, it said.

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