Hong Kong Airlines has managed to avoid having its flying licence suspended after it raised enough cash to satisfy the city’s Air Transport Licensing Authority (ATLA) and says it will “endeavour” to serve all its passengers over the upcoming holiday season and beyond.
“Hong Kong Airlines is here to stay,” the airline said in a press release. “We have always been committed to delivering a safe and smooth operation to our customers, while striving for the long-term development of Hong Kong Airlines.”
It remains unclear where Hong Kong Airlines got the funding from to satisfy the ATLA. The airline said only that the funding would be injected into the airline “by phases”. Last week, the airline said it had secured an “initial cash injection plan”.
Last Monday, Hong Kong Airlines’ parent company HNA Group secured a four billion yuan (US$568 million) three-year loan from eight Chinese banks, with each providing 500 million yuan (US$71 million), according to a filing to the Shanghai Stock Exchange.
The filing said the money can be used for aviation fuel, aircraft supplies and materials, take-off and landing fees, staff salaries and aircraft leasing fees. Hong Kong Airlines has not said in its statement whether its cash injection plan involves any funds from this loan and a spokesperson did not respond to a request for comment. According to the stock exchange filing, the funds can be used for any of HNA Group’s affiliate airlines.
Last week, the ATLA gave Hong Kong Airlines five days to improve its financial situation or risk losing its licence. The airline had been unable to make salary payments to staff and had announced a slew of route cutbacks, including a plan to cease all flights to North America by February 2020.
The ATLA said on Saturday that the financially troubled airline had satisfied two conditions for keeping its licence that the ATLA set out on December 2. These were:
- Hong Kong Airlines must ensure cash injection at a level determined by ATLA (or provide an alternative to the satisfaction of ATLA) by Saturday December 7
- Raise and maintain its cash and cash equivalent level as stipulated by ATLA
While the ATLA’s announcement on Saturday is good news for the airline as it means it can keep flying, the ATLA made clear that it is still keeping a close eye on the airline, which it has been monitoring “over a long period of time”.
“ATLA will continue to closely monitor the overall operation of HKA, and will ask HKA to continue to improve its operational efficiency and modify its long-term operational strategy. ATLA will take appropriate actions in light of the circumstances as necessary,” the ATLA said.
Hong Kong Airlines said it would continue to work to cut costs and reduce losses.
“Over the past year, Hong Kong Airlines has rolled out a consolidation programme to cut costs, optimise its network and elevate the customer experience. Moving forward, we will continue to drive consolidation and strengthen our internal structure to operate more efficiently and improve our revenue,” the airline said.
“Hong Kong Airlines would like to thank our customers and business partners for their ongoing support and confidence in us. Our staff will continue to maintain the highest standard of professionalism, put the interests of our customers first and work together to offer our best services to the people of Hong Kong and our overseas customers. We will also actively communicate with our service providers to resolve outstanding financial issues and gradually bring our service back to normal.”