The resignation of HNA Group's chairman has caused some to speculate that Hainan Airlines Co, China's fourth largest carrier, may quit the stock market. Hainan Airlines is parented by HNA.

Chen Feng resigned from the HNA board, Hainan Airlines Co said in a statement filed to the Shanghai Stock Exchange yesterday. Chairman secretary Zhang Shanghui said Chen has accepted a position as chairman of Grand China Air.

Chen said earlier HNA's restructuring plan was approved by the General Administration of Civil Aviation and the group is likely to complete the restructuring by the end of the year.

The restructuring will create a flagship carrier, Grand China Air, a combination of four of HNA's major airlines - Hainan Airlines, Xinhua Airlines, Shanxi Airlines and Changan Airlines. Grand China Air is seeking overseas listing next year.

The Hainan government is the largest shareholder in Grand China Air with a 48.61 percent stake. Financer George Soros holds 18.64 percent, and HNA and its subsidiaries own the remainder.

It is still unknown if the launch of Grand China Air will lead to Hainan Airlines Co's market exit, according to an HNA Group source. Although HNA said Chen's departure would not affect the group, it still drew attention to Hainan Airlines' shares.

In June 2006, Grand China bought 1.65 billion of Hainan Airlines’ newly issued 2.8 billion shares, accounting for 46.7 percent of the enlarged capital Hainan Airlines raised 5.6 billion yuan (US$750 million) through issuing the shares and Grand China became the controlling shareholder.

As of October 31, the five airlines listed on the domestic stock markets had all released their third-quarter results. Hainan Airlines ranked fourth, with earnings per share of 0.119 yuan and lagging far behind the top three.

(Chinadaily.com.cn November 2, 2007)