Government presses Hong Kong Airlines to further clarify finances, casting fresh doubt on troubled carrier’s business
- Call by licensing body comes after review on the same day, suggesting dissatisfaction with airline’s presentation
- Authorities vow to continue assessing situation and take follow-up action if needed
The authorities have requested that Hong Kong Airlines further clarify and provide information about its financial situation, casting fresh doubt over the troubled carrier’s business viability.
In a late-night statement on Monday, the Air Transport Licensing Authority (ATLA) said it had reviewed the finances of the city’s third largest airline at a meeting that day, prompting a follow-up inquiry.
“ATLA requested that Hong Kong Airlines provide further clarifications and provide supplementary information,” a statement from the Transport and Housing Bureau (THB) said, signalling dissatisfaction with the airline’s initial explanation in its financial presentation.
Hong Kong Airlines shrugs off cash concerns amid collapse fears
The beleaguered company had already put forward a financial plan and business case, as demanded last month by ATLA.
A government statement on Monday added that the airline licensing body would “continue to assess the financial situation” of Hong Kong Airlines “and will keep in view the development and take follow-up actions as necessary”.
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The growing concern over the financial robustness of the carrier prompted authorities to name it publicly and demand an explanation on its status just before Christmas.
The Post reported last week that mounting fears that the airline would collapse over the Lunar New Year prompted the THB and the Security Bureau, overseeing the Immigration Department, to consider reviving contingency measures in the event of thousands of travellers being stranded.
The last time the government had worked on such plans was in 2008, when budget long-haul carrier Oasis Hong Kong went under.
According to sources familiar with the regulations, Hong Kong Airlines has to provide a detailed business plan with financial costs to prove it can be a viable business. ATLA has the power to revoke the airline’s licence if it deems its financial position unsatisfactory.
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The company was contacted for comment, including more information on what was sought by the government licensing body.
But it said only: “Please refer to the ATLA press release. We do not have anything to supplement.”
Aviation analyst Will Horton said: “At this point, and given owners and politics, Hong Kong Airlines is too big to fail.”
At this point, and given owners and politics, Hong Kong Airlines is too big to fail
The airline said last week it would be able to meet the US$550 million obligation, after weeks of speculation culminated in HNA’s biggest creditor, China Development Bank, reportedly offering a loan.
Intrigue was first sparked after the carrier’s vice-chairman Tang King-shing, the city’s former top police officer, abruptly left after just two years on the job, followed by chief financial officer Jacky Luo Jiaqi, during a critical time when the company was struggling to meet loan repayments.
The carrier has delayed delivery of new planes, halted plans for further long-haul flights and cut flights on existing routes. The Post reported last week that in some instances staff were paid late and pilots were offered unpaid leave, with cutbacks on perks for employees, which was confirmed by the airline.
Hong Kong Airlines operates 38 passenger aircraft to 36 destinations. It carried 7.64 million passengers last year and employs 3,900 staff, most of whom are based in the city.
