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Hong Kong Airlines receives cash injection

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05/12/2019

With a Dec. 7 deadline set by regulators looming, Hong Kong Airlines (HKA) said Dec. 4 it has drawn up a cash injection plan and received sufficient cash to pay its employees on Dec. 5.

However, the airline did not reveal where the cash came from, although it is widely believed to be through its holding company, HNA Group, which had received a HKD4 billion ($569 million) loan from state-owned banks. 

On Dec. 2, Hong Kong’s Air Transport Licensing Authority (ATLA) gave Hong Kong Airlines until Dec. 7 to find either a new investor or avenue to inject cash into airline operations, or risk having its license revoked or suspended.

The move followed HKA’s Nov. 29 statement that it would be holding back November salary for selected employees, with the exception of cabin crew and overseas employees. HKA had also said it was stopping IFE on its aircraft, likely because of its inability to pay suppliers or part of its cost-cutting measures.

ATLA had said Dec. 2: “HKA’s financial position has deteriorated rapidly to such an extent that has severely impacted on HKA’s capability in meeting its obligations as an employer to pay salary and the probability of providing a satisfactory service under its license in respect of continuity and regularity of operation.”

It is unclear if the new cash boost met the unspecified “satisfactory level” set by ATLA, which will decide Dec. 7 if it would suspend or revoke HKA’s license.

After the ATLA warning Dec. 2, owners HNA Group secured a HKD4 billion from eight Chinese banks: China Development Bank, China Exim Bank, Bank of China, Agricultural Bank of China, ICBC, China Construction Bank, Postal Savings Bank of China and Bank of Communications. Each contributed CNY500 million to the pool.

In addition, HNA transferred the majority shares of West Air to the Chongqing city government, which will now hold at least 70% of the LCC. The percentage and value of shares transferred was not disclosed.

 Chen Chuanren, chuanren@purplelightvisuals.com

https://atwonline.com/airlines/hong-kong-airlines-receives-cash-injection

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