An airline in recent turmoil, Hong Kong Airlines (HKA) is the third largest carrier in Hong Kong. It has seconded or released permanently a number of pilots to other regional airlines as part of a downsizing move.
According to South China Morning Post and internal memos from HKA, the carrier has offered secondments or permanent employment with four subsidiaries of, or airlines controlled by, HNA Group, China. The four are Tianjin Airlines, HK Express, Hainan Airlines, and Hong Kong Air Cargo. HNA also owns 29% of HKA’s shares.
57 pilots are moving from Hong Kong Airlines
Reports indicate 57 pilots will make a move, and that Emirates will hire around a fifth to fly its Airbus A380 planes.
HKA is working to downsize to cope with financial woes that are threatening the business. It has extra pilots available after not taking delivery of at least four new planes. There are concerns about HKA’s finances including its ability to repay creditors and those it leases aircraft from.
Reducing fleet size by cutting Airbus A330-200s
Other recent reports indicate the airline may be looking to reduce its fleet down from 38 to 28 aircraft, doing so by cutting 10 Airbus A330-200s. In 2018, both HKA’s co-chairs resigned leading recently to a dispute and “apparent boardroom coup.”
HNA Group itself is facing $100 billion in debt which could see it sell-off assets such as HKA. In March 2019, Bloomberg reported that Cathay Pacific could be considering purchasing a minority stake in the airline. This, potentially to combat a declining market share for Cathay Pacific in Hong Kong.
Hong Kong Airlines says it’s here to stay
Though Bloomberg cited sources not willing to be named and was unable to confirm the story with Cathay Pacific. HKA responded:
“Hong Kong Airlines is here to stay and committed to sustaining our long-term growth. We have and will remain open to discussions with strong strategic investors.”
In January 2019, HKA disputed rumors of potential bankruptcy threatening to sue press outlets for spreading false information.
In Reuters news, today shareholders were apparently informed that HKA would need a substantial cash injection in order to protect its operating license. This information stemming from a meeting on April 1, 2019. HKA has reassured that its operations “remain normal.”
Some uncertainty for HKA could stem in part from its management turmoil and its relationship with HNA. A relationship which is apparently complicated. David Yu, adjunct professor of finance at New York University, Shanghai, says:
“HNA’s shareholding structure and how they structure investments has always been very complicated, and the HKA case isn’t any different.”
HKA was founded in 2006 and has gained market share, where Cathay Pacific has seen a reduction. It is classed as one of the top 20 airlines in the world by Skytrax with a 4/5 star rating.
In a statement this week in response to concerns about HKA’s management, the airline says:
“Our operations remain normal. Over the Easter holidays, Hong Kong Airlines operated 417 flights and carried over 85,000 passengers between 19 and 22 April 2019, representing a 3% increase over the same period last year. As the Labour Day holidays approach, Hong Kong Airlines is getting ready to serve more than 102,000 passengers who have chosen to fly with us for their holidays.”