Struggling HK Airlines given five days to save its license

hong-kong-airlines

Owner of Hong Kong Airlines (HKA), debt-ridden HNA Group, has been given until 7 December by Hong Kong authorities to put the carrier’s house in order, or risk the suspension, or loss of its licence.

In issuing the deadline, Hong Kong’s Airline Transport Licensing Authority (ATLA) noted the airline’s finances had “deteriorated rapidly”, to the extent the authority doubted the carrier could meet some of its airline licence conditions.

Citing a “challenging business environment” caused by civil unrest in Hong Kong, the carrier has already cut some operations earlier this month, and just announced today the cancellation of direct flights to Vancouver (YVR) with plans to cancel Los Angeles (LAX)-bound flights from February.

The HNA Group said in a Shanghai Stock Exchange filing on Monday that Chinese state-owned banks had extended a HKD 4.4 billion (USD 562,000) loan but didn’t explicitly say it would use the money to prop up Hong Kong Airlines. Instead, HNA says the money would be put towards aviation fuel, aircraft expenditure, operational expenses, salaries and financing costs for HNA Holdings and its affiliated airlines.

There are nearly two dozen aviation companies within the HNA Group, including its flagship carrier Hainan Airlines. This includes HKA’s all-cargo affiliate Hong Kong Air Cargo, which despite problems on the passenger side, appears to be operating as per normal. The cargo carrier holds a separate Air Operator Certificate (AOC) from Hong Kong Airlines, which was granted for a period of five years on 20 April 2017. The cargo carrier also manages the belly capacity of Hong Kong Airlines’ fleet of A320s, A330s and A350-900s.

The HNA Group sold off its HK Express carrier to Cathay Pacific for HKD 4.93 billion in March, with Hong Kong transport officials promised by HNA that proceeds of the sale would go towards strengthening HKA. However, both analysts and company insiders say there is no evidence that the money was used to help support the struggling carrier.

In a rare move the Airport Authority Hong Kong (AAHK) weighed in, saying it is “very concerned about the financial situation of Hong Kong Airlines (HX) and the potential impact on its passengers”.

“The AA continues to communicate with relevant government departments and closely monitor the situation. To ensure smooth airport operations, the AA will implement appropriate measures when necessary.”

China Development Bank is overseeing a three-year funding package and has been the lead bank in the restructuring of HNA’s assets, following a debt-fuelled USD 50 billion spending spree over the past few years.

Summary
Struggling HK Airlines given five days to save its license
Article Name
Struggling HK Airlines given five days to save its license
Description
Owner of Hong Kong Airlines (HKA), debt-ridden HNA Group, has been given until 7 December by Hong Kong authorities to put the carrier’s house in order, or risk the suspension, or loss of its licence.
Author
AsiaCargoBuzz.com
AsiaCargoBuzz.com
http://asiacargobuzz.com/wp-content/uploads/2017/04/NEW-LOGO1.png
ECS Group

Be the first to comment

Leave a Reply