Is Five Days Enough Time to Save an Airline?

Things are not looking good for Hong Kong Airlines (HKA). The carrier’s management has been given until December 7 to save the company, or risk leaving 3,500 employees unemployed and the airline struggling to maintain its operating license.

Financial Struggles

Hong Kong Airlines has been facing financial fragility since December 2018. In just the past few weeks, it has been revealed that it has not been able to pay November salaries on time, has canceled all long-haul routes, and has shut off all inflight entertainment. These drastic money-saving attempts show the airline’s struggle to maintain financial stability, and The Air Transport Licensing Authority of Hong Kong (ATLA) is taking action. They determined that the airline’s finances have “deteriorated rapidly,” suggesting that the carrier is no longer meeting the minimum requirements to hold an operating license. On Monday, the agency announced that Hong Kong Airlines’ days are numbered if they cannot come up with the cash or investors to remain afloat, stating “After careful consideration of the financial position of HKA at present, ATLA must take immediate and resolute action to prevent further deterioration of HKA’s situation in order to protect public interests. If HKA fails to improve its financial situation as required by ATLA by the deadline, ATLA will take further action … which provides for revocation or suspension of license. ATLA will announce its decision by December 7, 2019.”

Since December 2018, the Civil Aviation Department (CAD) has conducted 180 inspections every other day to ensure the airline maintains safety standards. Furthermore, the Transport and Housing Bureau has held a dozen meetings with company management, trying different tactics to try to control the situation, such as cutting back long-haul operations. The most recent meeting held last Friday seems to be the straw that broke the camel’s back, as the airline’s survival deadline was announced shortly after.

HKA Response

Hong Kong Airlines acknowledged the request by ATLA and said it is determined to meet the Saturday deadline. A spokeswoman for the company said, “Hong Kong Airlines is actively communicating with our shareholders and other stakeholders to meet the new requirements from ATLA as requested. Our operation is still running normally and we remain committed to flying our passengers to their destinations safely.”

The government made it clear that it is on the airline to find the cash to continue operations, and that current operations and services not be disrupted. In the meantime, CAD has said that it “will continue to closely monitor HKA’s flight operations and aviation safety, with a view to ensuring that HKA’s operations will continue to comply fully with the requirements of relevant aviation laws and regulations.”

HK$4.4 Billion Loan

Late Monday, HNA Group (owner of HKA), received a loan of HK$4.4 billion from Chinese state-owned banks. HNA stated that the money will be used to pay salaries, aircraft leases, fuel, and other costs; however, the specific airline that the money is going to was not specified.

HNA Group said in its loan application, “The company’s application for bank loans this time is to promote the stable development of the company’s daily operations and ensure the safe and orderly operation helps the company to further prevent risks, focus on the main aviation business, and improve the company’s performance.”

HNA Group owns multiple airlines, including Hainan Airlines and Grand China Air, so it is not certain this loan will be the bailout Hong Kong Airlines is hoping for. South China Morning Post received comments from anonymous senior staff members of HKA claiming they do not trust the HNA Group, stating unfulfilled promises and lack of sincerity.

Are You Affected?

If you have a flight booked on Hong Kong Airlines after December 7, be sure the check the company’s website and social media for status updates and potential cancellations. The airline’s website currently has this posted as a notice to all passengers:

• Please click flight status to check your flight status.
• In the event your flights are canceled, you may get a refund through our Refund Application service. Flight Certificate is also available on request.
• For immediate assistance, please use our Live Chat service or Contact Us.
• If your ticket was purchased through a travel agent or if you belong to a tour group, please contact your agent directly.
• We sincerely apologize for the inconvenience caused.
• Please check hongkongairlines.com for the latest updates.