Crisis-hit Hong Kong Airlines (HKA) is expecting a substantial amount of money to be pumped into its hands for survival by Saturday, when the government will decide its fate, CEO Sun Jianfeng has said.
In an exclusive interview with the Post, the boss of the third-biggest carrier in the Asian financial hub said he expected money to arrive “within one or two days”, which would ensure the airline’s survival for now.
“We will try our best to get enough money,” he said. “But it’s very short notice to get a huge [amount] of money.”
Founded in 2006, the carrier is backed by the heavily indebted HNA Group, and is the only local competitor to the Cathay Pacific Group’s three passenger airlines in the territory. The carriers, as well as foreign airlines, have been battered by the six-month-long anti-government protests.
Last Monday, the Air Transport Licensing Authority (ATLA) deemed HKA’s financial situation had “deteriorated rapidly” as it could not pay its staff on time, amid further concerns that its money troubles could impact its ability to operate flights, in breach of its licence.
“The Air Transport Licensing Authority has received the response from Hong Kong Airlines Limited regarding the two new conditions it had attached to the carrier’s licence on December 2, 2019,” the authority said in a statement on Thursday evening.
“ATLA is now reviewing related information and will announce its decision by December 7, 2019.”
A spokeswoman reiterated the airline had a secure cash injection plan in place to meet the requirements of the authorities.
The airline is understood to have submitted a new financial plan with its new source of income, but the company is heavily reliant on obtaining the money from undisclosed parties.
HKA remained locked in talks with the government, however, as it answered questions about its plan to turn the company around.
HNA Group, the controlling shareholder of Hong Kong Airlines, obtained a HK$4.4-billion (US$560 million) loan from a range of Chinese state-owned banks on Monday, but it remained silent on whether the money would go to the stricken carrier.
Meanwhile, scores of employees confirmed to the Post they had finally received wages for November that had not been paid on time. On Wednesday, the company said it had drawn up an “initial” funding plan to pay overdue wages and for other services to keep the airline operating smoothly.
In 2018, the company reportedly lost HK$3 billion. For the years 2013-2015, the airline made a cumulative profit of HK$1.4 billion, according to the company’s bond documents.
Among the plans under consideration for restructuring, the airline could shrink the number of its fleet of 18 widebody Airbus planes – many of which are equipped for long-haul flights it is discontinuing.
The airline also has 10 smaller single-aisle Airbus jets, which are suited to its regional flights but only handle half the number of passengers as the widebodies do. More single-aisle jets had been planned before the fresh cash crisis.
The 13-year-old airline flies mostly in North Asia and Southeast Asia, and a quarter of its 39 planes are grounded. Some 3,500 jobs are at risk.
The prospect of losing its licence issued by the ATLA means the airline could stop flying and go out of business under the weight of its losses and debts.
Struggling for more than 12 months, HKA’s financial reckoning was exposed over recent months as the six months of civil unrest in Hong Kong has affected all industries and pushed the territory into recession.
More from South China Morning Post:
- Hong Kong Airlines says it has acquired enough cash to pay its staff as it battles to keep its licence to fly
- Cathay Pacific cuts pay rises for staff to 2 per cent, gives one-off sum of up to US$3,800 in place of year-end bonuses
- Hong Kong Airlines fighting to survive as licensing authority calls crisis talks over carrier’s financial woes