Research On The Identification And Countermeasures Of Debt Overhang Under Rapid Expansion

As an important strategic industry in China’s economic and social development,civil aviation is an important part of the new journey of socialist modernization,and also an important part and strong support for the construction of a strong transportation country.In the past 10 years,the scale of domestic civil aviation transport has seen a significant growth,and the volume of passengers and cargo transport has increased rapidly.The number of airlines,fleets,routes,navigable cities and other data all show the vigorous development vitality.HNA Group,as a pivotal position in the world’s top 500 enterprises in the civil aviation industry,announced bankruptcy reorganization in early 2021.Hainan Airlines Holding Co.,Ltd.(hereinafter referred to as "Hainan Airlines")which belongs to the aviation sector is also unable to avoid the fate of being filed for bankruptcy reorganization.As a latecomer in the civil aviation market,H Airlines is one of the four major domestic airlines,which is inseparable from the rapid expansion after 2010.But in the process of rapid expansion,high financial leverage and financing cost,HNA group internal violations related party transactions,outstanding debt default risk,not consistent with the enterprise expansion speed earnings level,the neglect of macroeconomic factors such as problems,and in 2020 the COVID-19 outbreak of multiple factors,eventually lead to H airlines into financial crisis and unable to save themselves.As a phenomenon that the debt burden of enterprises exceeds its repayment ability,the debt overhang will make the company fall into financial difficulties and accelerate the process of enterprise bankruptcy.Therefore,it is very important for enterprises to identify and analyze the causes of corporate debt overhang and put forward effective countermeasures for scientific and effective management.This dissertation takes H Airlines as a example.In the process of research,it first sorts out the literature related to debt overhang and financial risks of airlines,and then introduces the concepts and theories such as financial leverage,resource surplus and diversified operation.Secondly,the Z-score model is used to identify debt overhang,analyze its causes from the aspects of investment risk,debt default,profit level,asset operation efficiency and non-financial factors,and put forward suggestions for debt overhang,rapid expansion,financial risk early warning and external supervision.Although the rapid expansion of H Airlines has left various hidden dangers for the healthy development of the enterprise,it is in line with the development strategy of H Airlines to some extent and coincides with the great development background of civil aviation.The research significance of this dissertation is to help H Airlines to deeply understand the problem of debt suspension,balance the contradiction between rapid expansion and debt,avoid falling into the death spiral of debt overhang again.At the same time,it also provides some reference value for other airlines to deal with the problem of debt overhang.