Hong Kong Airlines has managed to avoid having its flying license 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.
At a literal last-minute infusion of capital, has allowed the carrier to keep its license to continue operating as ATLA has decided not to take further action against Hong Kong Airlines for the time being. Last week, after setting a deadline for December 7th 2019, ATLA informed the carrier that they had to produce new investors or infuse more cash into their operations amid their financial plague in order to retain their license to operate. Speculation about Hong Kong Airlines heading into bankruptcy surfaced, with many expecting another Thomas Cook situation in the Airlines and Aviation industry.
Yet in a twist of fates, the carrier was able to secure enough funds to satisfy ATLA and retain its operational licence. Even though the source of the funds to satisfy ATLA’s conditions is unclear, Hong Kong Airlines’ parent company HNA Group secured a four billion Yuan (USD 568 million) three-year loan from eight Chinese banks, with each providing 500 million Yuan (USD 71 million), according to a filing to the Shanghai Stock Exchange.
No comment has been made on where the money came from for the cash-injection.
The filling 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 in fact confirmed nor denied whether the cash injection plan involves any funds from these loans. However, ATLA seems satisfied with the carrier as they have managed to meet the 2 conditions outlined by them.
Even though the decision allows the airline to keep flying and avoid standing passengers the way Thomas Cook Group Plc did with more than 150,000 tourists when it collapsed in late September, the carrier still continues to face headwinds through anti-Beijing protests and the clear recession-hit Hong Kong economy. Nonetheless, Hong Kong Airlines is not yet out of murky waters. ATLA has made it very clear that they will still keep a very close eye on the carrier to “monitor the overall operation of Hong Kong Airlines, and will ask them to continue to improve its operational efficiency and modify its long-term operational strategy”.