The Hong Kong Airport Authority has seized 7 planes belonging to beleaguered Hong Kong Airlines to “protect the financial interests of both AAHK and the government.”
This won’t impinge on Hong Kong Airlines operations because the planes that have been seized were all parked and inactive (which separately underscores the challenges the airline is facing).
The aircraft, which have been stored, have not flown for three to 11 months. According to industry data, most of the planes affected are owned by the airline or a leasing company linked to its controlling shareholder, HNA Group.
The carrier’s parent company only just got a loan allowing Hong Kong’s third largest airline to continue operations.
HNA Group has been under pressure from China to divest itself of assets and pay down debt. It had racked up over $100 billion in borrowing as it went on a worldwide acquisitions spree. However it has lacked cash to invest in its businesses. And some businesses have found it difficult to make interest payments or even – like Hong Kong Airlines, before obtaining this loan – to pay employees and for fuel.
I wouldn’t be buying tickets on the airline, and that of course creates its own self-fulfilling challenges.