Hong Kong Airlines might be just about to become another 2019 tragedy, with rumors that its operating license could be suspended. The airline has been suffering financially for several months now (in part thanks to the unrest currently gripping the country) and now must procure a cash injection to keep operating.
What is the current situation?
According to the Hong Kong Air Transport Licensing Authority (ATLA), the airline has failed to make changes to steer the airline away from pending financial ruin. The ATLA issued an alert earlier today, which read:
“ATLA met the senior management members of HKA again 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.”
Hong Kong Airlines, which operates a fleet of 44 aircraft to 48 destinations, has been struggling for the last few months. Its problems, however, cannot be entirely blamed on the Hong Kong unrest that is still plaguing the city. The airline actually has very few connecting passengers and a route network not ideal for cross-continental travel (which rival Cathay Pacific is relying on during this hard time).
A spokesman for ATLA continued, “After careful consideration of the financial position of HKA at present, ATLA must take immediate and resolute action to prevent further deterioration of HKA’s situation in order to protect public interests. In accordance with the two new license conditions attached by ATLA, HKA must, by a deadline set, ensure cash injection at a level determined by ATLA (or provide an alternative to the satisfaction of ATLA), and raise and maintain its cash and cash equivalent level as stipulated by ATLA.”
Essentially if the ATLA is not satisfied in-prompt by Hong Kong Airlines’ actions to ensure cashflow (perhaps by a cash injection) then the agency would have every right to remove their aviation license.
Hong Kong Airlines is quickly exhausting all of its options to cut costs. In recent weeks it has reduced long-haul routes, removed in-flight entertainment and sent a perfectly good Airbus A350 aircraft into storage (as they don’t have the funds to pay of the aircraft). The airline even asked foreign pilots to step down out of their roles. Now, outside of investment, there seems little left for the airline to do.
ATLA will announce its decision by December 7, 2019.
What do you think? Will Hong Kong Airlines be able to survive? Let us know in the comments.