Last week I wrote about the bad news surrounding Hongkong Airlines financial position and their inability to pay staff which threatened the airlines ability to continue flying as regulators zoomed in.
The company has now announced that it will receive a substantial cash injection from the mainland China parent company HNA which had to secure loans from a banking consortium.
It was indeed a tough week for the cash strapped carrier and it’s staff as management first announced that it couldn’t pay HK based staff for another week. Then local regulators examined the airline and warned that their operators license would be suspended if the airline can’t stabilize their financial position.
I first wrote about it here and then a couple days later John followed up with further news when Hongkong Airlines was under formal review.
Eventually the parent company HNA which is based in mainland China had to make a decision of injecting more capital into the Hong Kong subsidiary or to let it meet it’s fate which would have essentially meant the airline will fold.
The lastest update of the South China Morning Post was that the airline expects incoming money by Saturday (today).
Crisis-hit Hong Kong Airlines (HKA) is expecting a substantial amount of money to be pumped into its hands for survival by Saturday, when the government will decide its fate, CEO Sun Jianfeng has said.
In an exclusive interview with the Post, the boss of the third-biggest carrier in the Asian financial hub said he expected money to arrive “within one or two days”, which would ensure the airline’s survival for now.
“We will try our best to get enough money,” he said. “But it’s very short notice to get a huge [amount] of money.”
Founded in 2006, the carrier is backed by the heavily indebted HNA Group, and is the only local competitor to the Cathay Pacific Group’s three passenger airlines in the territory. …
“The Air Transport Licensing Authority has received the response from Hong Kong Airlines Limited regarding the two new conditions it had attached to the carrier’s licence on December 2, 2019,” the authority said in a statement on Thursday evening.
“ATLA is now reviewing related information and will announce its decision by December 7, 2019.” …
The airline is understood to have submitted a new financial plan with its new source of income, but the company is heavily reliant on obtaining the money from undisclosed parties. …
Meanwhile, scores of employees confirmed to the Post they had finally received wages for November that had not been paid on time. On Wednesday, the company said it had drawn up an “initial” funding plan to pay overdue wages and for other services to keep the airline operating smoothly. …
As far as communication to the customers goes the airline has been eerily silent when it came to defending their position or reassuring passengers about their tickets.
First the information that the entertainment system is out of service, likely because the carrier can’t pay the licensing fees for the content:
Then the not very informative message that passengers with cancellations could seek a refund through the airlines Refund Application channel:
No other information regarding the media reports surrounding Hongkong Airlines were forthcoming so far.
As of this moment there is no update yet how the ATLA in Hong Kong is going to proceed with the matter and if the measures Hongkong Airlines has undertaken are satisfactory to the authorities.
Conclusion
Even with fresh money coming in it’s essentially going into a furnace. The airline isn’t profitable and has reportedly lost HK$3 billion. It’s unlikely that the situation in Hong Kong is going to stabilize anytime soon which weakens demand to travel to the city itself. Only connections via Hong Kong would be attractive if priced right and in fact the airline has offered quite cheap tickets via HKG all year long already.
My opinion remains as I said initially that this situation is far from over. Passengers will be very cautious to purchase new tickets on Hongkong Airlines which will affect the carriers cashflow. I don’t expect the ATLA to ground the carrier short before the Christmas holiday and New Year travel period but if a liquidity shortage occurs again then all bets are off.
