SR Technics is reportedly drawing $128 million in emergency loans in Switzerland. The aviation firm's owner is effectively controlled by the Chinese government.

The Zurich-based aviation servicing firm drew credit lines from UBS and Credit Suisse totaling 120 million Swiss francs ($128 million), Swiss daily «Tages-Anzeiger» reported on Monday (behind paywall, in German). Eighty percent of the sum – 96 million francs – is backstopped by the government as part of a lending bazooka to counter the pandemic crisis.

HNA Group, a Hainan-based conglomerate which the Chinese government effectively took control of during the coronavirus pandemic due to its debt burden, owns 80 percent of SR Technics. HNA is also a considerable shareholder in Deutsche Bank but has been consistently whittling that stakeholding to pay down its $75 billion debt pile.

Domestic Skirmish

The major infusion of credit for SR Technics isn't a surprise – the Swiss government pumped a total of 1.9 billion of loans into its aviation industry including flagship carrier Swiss.

However, the SR Technics loans were apparently preceded by a skirmish in Bern: Switzerland's competition commission wanted to block the credit, but the government overruled the objection, the Swiss outlet reported.

HNA also benefited – directly – from a U.S.  emergency loan scheme, news wire «Bloomberg» reported last week. The grants come against the backdrop of an escalating rivalry between the U.S. and China. 

Chinese Owners

In Switzerland, the Bern-based anti-trust body had sought to veto the SR Technics loans because it believed they would conflict with an aviation agreement with the EU, the report said. The watchdog feared such a move would interfere with the market, «Tages-Anzeiger» reported.

Mubadala, the United Arab Emirates' sovereign wealth fund, owns the remainder of the Swiss firm, which operates, maintains, and services aircraft, engines, and components. Two other aviation servicing firms, Swissport and Gategroup, are also Chinese-owned but did not directly draw corporate loans.