MIAMI – Hong Kong Airlines has only got one week to save its operating license, amid the deterioration of its finances. The country’s regulators are due to make a decision by Saturday, with the airline’s aim now solely on raising enough cash and prove its liquidity.
The Hong Kong Air Transport Licensing Authority (ATLA), said that it met with senior management members of HKA on November 29, 2019, and heard the representation and explanations made by them about the latest financial position of HKA.
“Having considered the latest financial position of HKA, ATLA was of the view that HKA’s financial position has deteriorated rapidly to such an extent that has severely impacted on HKA’s capability in meeting its obligations as an employer to pay salary and the probability of providing a satisfactory service under its license in respect of continuity and regularity of operation. ATLA found the situation extremely worrying.”
The airline has had to make cuts to services such as Vancouver, which have not been performing well, in addition to delaying payments to its staff.
One root cause that could be to blame for this would be the anti-Beijing protests that are ongoing in the country, causing dire trouble to both Hong Kong Airlines and Cathay Pacific.
Cathay Pacific has also been feeling the bite of these protests, with shares trading at a 10-year low, due to consumers not wanting to get into the middle of the disruption that is being caused.
Cathay Pacific is expected to issue profit warnings, as well as implementing plans to reduce capacity next year, substantiated, especially, with arrivals from Mainland China dropping 46% in October, as well as visitors to Hong Kong being reduced by a staggering 44%.
Honk Kong Airlines’ backer, HNA Group, has confirmed that it’s facing difficulties but has decided not to disclose its financials.
Other factors have included the U.S-China Trade War, which is currently reducing the amount of growth as well as the further words mentioned about authorities already over such funding.
Bloomberg reported in an email statement from the carrier, that the “operation is still running normally and we remain committed to flying our passengers to their destinations safely”.
“Hong Kong Airlines will continue to monitor the situation closely and adjust its business plan accordingly to ensure that it remains commercially viable and sustain its long-term growth,” the email also said.
The discontinued routes to the likes of Vancouver, Ho Chi Minh and Tianjin have resulted in the airline having to seek different travel routes for consumers who had booked the flights.
HK Airlines currently has a fleet of 43 Airbus aircraft, consisting of 12 A320 Family aircraft, 26 A330s, and five A350 XWBs.
With Cathay Pacific already wanting to reduce capacity, the demise of HK Airlines could be detrimental to its cause, as then the hit on infrastructure would then become much worse, with it being the only standing carrier in the country of Hong Kong.
With the week being at an early point currently, all eyes will now be on the carrier to ensure it can raise enough capital to keep the airline afloat by Saturday, otherwise, we could indeed have another victim to the volatile world that is the aviation industry.