Hong Kong Airlines (HKA) has sought to reassure passengers it continues to operate as normal despite being given five days to improve its financial situation by local regulators.
On Monday, December 2 2019, the Hong Kong Air Transport Licensing Authority (ATLA) said it had attached two new conditions to Hong Kong Airlines’ licence in light of the carrier’s ongoing financial problems.
The ALTA said in a statement it met with Hong Kong Airlines’ senior management on November 29 2019 and came away with the view that the carrier’s financial position had “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 licence in respect of continuity and regularity of operation”.
“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,” an ALTA spokesperson said in a statement.
“In accordance with the two new licence 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.”
Should Hong Kong Airlines fail to improve its financial situation as required by ATLA by the December 7 2019 deadline, the authority said it would take further action that could include the revocation or suspension of its licence.
Hong Kong Airlines, which employs about 3,500 people, has been scaling back its operations for months amid what it had previously described as a challenging business environment. The political demonstrations in Hong Kong have also affected all carriers operating into and out of the Special Administrative Region.
Most recently, it announced long-haul flights to Los Angeles and Vancouver would end in February 2020, with frequencies on other routes cut as part of efforts to reduce its operations by about six per cent.
Flights to Cairns and the Gold Coast were dropped in October 2018, while it stopped flying to Auckland in May 2019.
The airline said in a statement on Monday its operation was “still running normally” and it remained “committed to flying our passengers to their destinations safely”.
“Hong Kong Airlines updates ATLA and the Transport and Housing Bureau (THB) regularly on our operation and financial improvement plan,” Hong Kong Airlines said.
“We have addressed our financial situation by implementing cost-savings measures, while adjusting our operation from time to time to respond to changing market demand.”
“Hong Kong Airlines is actively communicating with our shareholders and other stakeholders to meet the new requirements from ATLA as requested. We will remain professional and deliver our best customer service to all passengers.”
The airline’s controlling shareholder is Chinese company HNA, which has been undergoing a major corporate restructure and selling assets as part of efforts to reduce debt and improve its financial position.
The Hong Kong Transport and Housing Bureau (THB) said Hong Kong Airlines “must face up to its problems seriously and use its best endeavours to meet ATLA’s requirements by the deadline in order to prevent its situation from further deteriorating and to protect public interests”.
“The THB has also reminded HKA that before any further decision of ATLA is made, it must continue to provide services to its passengers in accordance with the terms and conditions of air tickets concerned,” the THB said in a statement.