Hong Kong Airlines Given 5 Days to Save The Company

Hong Kong’s government gave the troubled airline just 5 days “to find new cash or last-minute investors, or face having its operating licence suspended or even revoked.”

The carrier, which has been controlled by China’s HNA Group that’s been ordered by Chinese authorities to reduce a debt load that exceeded $100 billion, has faced major troubles over the last year.

  • Problems paying for fuel
  • Problems paying employees
  • Problems paying investors (HNA even offered investors airline tickets in lieu of interest payments)

They’ve announced the elimination of all of their long haul routes. And their inflight entertainment system was turned off when provider Global Eagle no longer believed they’d get paid and was therefore unwilling to incur licensing costs for content on behalf of the Hong Kong airline.

HNA now has to either invest cash in the airline – though they’ve lacked cash, hence the order from regulators to reduce exposure to risk – or find new investors. In other words, HNA is caught between Chinese regulators concerned about the company’s profligate investments and debt, and Hong Kong aviation regulators concerned about the lack of investment and cash in an airline, and therefore its ability to continue to operate (and do so safely).

Hong Kong’s Civil Aviation Department has been conducting “inspections about every two days to ensure aviation safety was not affected.” The carrier’s problems, while not helped by reduced demand for Hong Kong travel resulting from protests, have been serious since long before those protests.

Without a new cash infusion, customers certainly shouldn’t be buying tickets on the airline, which creates its own self-fulfilling challenges.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »


Leave a Reply

Your email address will not be published. Required fields are marked *