China’s government is poised to take over the indebted HNA Group, which includes Hainan Airlines, and sell off its airlines.

The provincial government of Hainan in southern China, where HNA Group is based, is in talks to take over the group with the blessing of Bejing after the grounding of Chinese air traffic due to the coronavirus reportedly brought HNA to the brink of bankruptcy.

News agency Bloomberg reported the group is likely to be broken up, with its airline assets sold off to China’s three biggest carriers – Air China, China Southern Airlines and China Eastern Airlines.

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The privately-owned group has been attempting to sell off assets and restructure following a debt-fuelled, $50-billion acquisition spree in 2016-17.

The group owns subsidiaries including Tianjin Airlines and Hong Kong Airlines. It announced 400 redundancies at Hong Kong Airlines this week.

HNA announced a refocus on its core aviation and tourism businesses in November just before the coronavirus struck.

The coronavirus outbreak has triggered a sharp slowdown in the Chinese economy, with cities in lockdown and the country’s airline industry in virtual shutdown.

No one from HNA was available to comment.