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Hong Kong Airlines receives cash injection
December 6th 2019
Regulator annoyed airline’s financial position delayed salary payments. Read More »
Hong Kong Airlines (HKA) has received a cash injection that should placate a regulatory demand for it to shore up its finances.
The Hong Kong regulator’s latest problem with HKA, which is backed by prominent and well-connected Chinese conglomerate HNA, began when the airline said payment of salaries for November would be delayed to some staff but not to its large and local cabin crew.
“HKA's financial position has deteriorated rapidly to such an extent that it has severely impacted on HKA's capability in meeting its obligations as an employer to pay salaries and the probability of providing a satisfactory service,” Hong Kong’s Air Transport Licensing Authority (ATLA) said on December 2. “ATLA found the situation extremely worrying.”
ATLA required HKA to secure a cash injection and raise and maintain its cash and cash equivalent level. ATLA did not disclose its financial thresholds for the airline. Failing to comply with its directive would result in ATLA considering further action against the airline that could include license suspension.
HKA chairman, Hou Wei, said in a statement there was an “initial cash injection plan”. He did not specify the source of funds, but earlier in the week, parent HNA received a RMB4 billion (US$568 million) loan from Mainland banks, including the four largest state-owned banks. HNA did not specify to which companies it would direct the fresh injection of funds but said they would be used for salaries, aircraft leases and other expenses.
Hou said the airline paid staff on December 5, a day earlier than media reported it would happen. At press time, ATLA had not publicly responded to HKA.
HKA has ended all long-haul flights and reduced some regional services. “We will continue to drive consolidation and strengthen our internal structure to improve our revenue,” HKA said.
