Hong Kong Airlines given deadline for financial turnaround

Photo: © Alan Wilson

Hong Kong’s licensing authority for aviation has set a deadline for Hong Kong Airlines, which forces the airline to find cash or investors until December 7th. If it fails to do so, the government authority could revoke the carrier’s operating permit.

This comes just days after the financially struggling airline had already announced cuts to its route network, and admitted that it is unable to pay out staff salaries on time. It confirmed dropping both of its remaining two long-haul flights – Vancouver and Los Angeles – in early 2020.

In a press release, Hong Kong Airlines (HKA) blames the “ongoing social unrest in Hong Kong” for its action. However, the airline’s difficulties are likely to go back further in time. In 2018, there were already reports suggesting that the carrier might be facing serious issues, after several crucial executives had left the airline. This even caused the company to threaten news outlets, which questioned its financial stability, with legal action.

Although the specific reasons are unclear, it is official that the airline is in immediate need for cash or investors, for example through its parent HNA – which is facing difficulties itself. Hong Kong’s Air Transport Licensing Authority (ATLA) concludes that Hong Kong Airlines’ financial status does not meet its requirements. The authority had previously issued several releases, stating that it is monitoring HKA’s situation, with the first statement being released in December 2018, following the aforementioned media reports. “The [ATLA] has been closely monitoring the situation of the airline over a long period of time, and has repeatedly asked HKA to submit financial improvement plans in accordance with the Air Transport Regulations.“, it said back in late-October of this year.

Hong Kong Airlines was founded in 2006 as part of the HNA Group, a Chinese company also owning several mainland carriers, such as Hainan Airlines. Its all-Airbus fleet consists of more than 40 aircraft in total, including A320, A330-200, -300 and A350-900. Some of its airplanes are currently stored.

A sister airline, previously HNA-owned low-cost carrier Hong Kong Express, was acquired by competitor Cathay Pacific in March, with the takeover being fully completed in July.

SHARE THIS ARTICLE

Latest Stories