Hong Kong Airlines Liquidation Rumours ‘Untrue’

Hong Kong Airlines has threatened to sue the press, squashing rumors that they are about to go bankrupt and condemning media for spreading false information.

This comes at a crunch time for the airline who is currently having a rough start to 2019.

Why is Hong Kong Airlines having trouble?

It actually began late last year, when three board members of the airline resigned at once. They did not issue a statement why they were leaving, and as Hong Kong Airlines is a private company they were not forced to discuss the issue. This lead to some rumors that the company was operating insolvently and these board members quit as remaining would mean they would go to jail (Under Hong Kong basic law if an executive of a firm knows that their company is trading insolvently and chooses to ignore it, they can face fines and jail time).

Under pressure from the company’s Chinese owners, HNA Group (who also owns airlines such as Hainan), Hong Kong Airlines issued a statement that the airline was in good standing. However, they did not release any financial information.

“The recent changes to Hong Kong Airlines’ board of directors does not impact our business and operations, we have recruited experienced leaders to join our management team. Hong Kong Airlines is also operating as normal and remain committed to offering our best service to customers who have chosen to fly with us. Between [Dec. 21 and 31], Hong Kong Airlines is expected to operate nearly 1,200 flights, flying close to a quarter of million passengers during the peak holiday season.” – Hong Kong Airlines statement

But not everyone was so convinced. Blue Cross, an international travel insurance firm, has decided not to insure any flights with the carrier, citing that there was a lack of trust in the longevity of the airline. This is a big loss for the airline as it means many corporate customers can’t trust that their insurance will cover their trips.

The airline has also been pushing back delivery of its new Airbus aircraft. They are currently expecting 15 new A350s and 13 new A330 aircraft, but have since delayed their arrival (Only 6 A350’s have been delivered compared to the expected nine). This doesn’t make much sense, as they need those aircraft to launch all the new routes they have planned.

cathay pacific market share
Cathay Pacific will have more and more competition from Hong Kong airlines as it continues to grow. Photo: Airbus

A deadline approaches

Additionally, Media has since then brought to light a rapidly approaching deadline for the airline. On Jan 20th, over 4.5 billion HKD ($570 million) in loans is due, and the speculation is that the airline will not be able to repay it. lawyers for the airline, however, have been quick to rebuttal media and threaten them with legal action.

We deplore the untrue and groundless speculations about Hong Kong Airlines ceasing operation and applying for liquidation. We reserve the right to take legal action against those who deliberately create these rumors,” – Statment from Hong Kong Airlines

Is Hong Kong Airlines in trouble?

The thing is, they are a private company and there is no way to know how much cash reserves they have or how financially sound they are. However, these rumors have to come from somewhere and a lack of financial news from the airline is troubling indeed.

As SimpleFlying does not want to be involved in these legal disputes, we would like to say there is no evidence that Hong Kong Airlines is in trouble and readers should draw their own conclusions.

Watch this space.

 

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