Debt-ridden Hong Kong Airlines (HKA) may be getting some much-needed funding following a declaration by the Hong Kong government that the airline was required to inject cash or find last-minute investors lest it lose its operating licence.
On late Monday, HKA’s parent company HNA Group said in a filing to the Shanghai Stock Exchange that it had obtained a HK$4.4 billion loan from Chinese state-owned banks, including Bank of China, Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China.
However, though extremely likely, filing did not specifically say the loan would be used to rescue HKA. Instead, it mentioned that the money would be used for aviation fuel, aircraft expenditure, operational expenses from flying, salaries, and financing costs for HNA Holdings and its affiliated airlines.
Earlier on Monday, the Air Transport Licensing Authority (ATLA) said that it would require HKA to find new cash or last-minute investors on or before 7 December. In the event that it couldn’t do so, the carrier’s operating licence would be suspended or even revoked, as the authority said the airline’s finances had deteriorated rapidly to the extent that HKA could not meet several of its airline licence conditions.
In a statement, ATLA has decided to attach two new conditions to HKA’s licence, requiring HKA to ensure cash injection at a mandatory level determined by ATLA and raise and maintain its cash and cash equivalent level as stipulated by ATLA.
HKA has been suffering financial troubles for more than a year. Only last week, the airline had to delay its salary payments as it did not have enough money to pay all its 3,500 employees in time for November, according to South China Morning Post. Around the same time, it announced that it would be terminating its routes from Hong Kong to Vancouver, Ho Chi Minh City, and Tianjin citing that “weak travel demand continues to affect the airlines’ business and revenue.” The airline’s woes have also meant that from 1 December onwards, all inflight entertainment would be suspended until further notice.