HONG KONG, 9 June 2021: Hong Kong Airlines, once a rising star in the region’s low-cost airline segment, has cut back its network to just a handful of flights from its home in Hong Kong, mainly flying cargo.
A South China Morning Post report on Monday said the airline is left with eight A330, mainly used for cargo flights, to stay airborne following salary cuts and flight crews and ground staff redundancies.
Its entire A320 fleet of around 36 aircraft was grounded earlier in the year, leaving it with eight A330s that, according to the airline’s website, serve destinations in mainland China, Tokyo and Taipei.
Job cuts have reduced the workforce from around 3,480 to just 2,300 since the beginning of the year. Prior to the cutback, staff accepted pay cuts of around 60%. The company cut pilots from 650 to just 120 since last December.
The deepening cash crisis is partly attributed to the financial failure of the HNA Group that holds controlling shares through its subsidiary Hainan Airlines. The Chinese airline announced on 19 January that it has entered bankruptcy restructuring after a government-led exercise to work out its debt failed to come up with funds to repay bondholders and creditors.
Hong Kong Airlines is currently connected to two lawsuits involving alleged non-payments tied to the HKD1.8 billion Hong Kong Airlines Aviation Training Centre. Hip Hing Construction Company last month lodged a claim in the High Court totalling HKD300 million with interest.
Meanwhile, it emerged last week that 67,400 creditors were chasing 1.2 trillion yuan (USD187 billion) from bankrupt HNA, according to Reuters, which cited a person who attended the conglomerate’s online meeting for creditors last Friday.
Financial analysts claim Hong Kong Airlines faces an uncertain future due to disruptive factors present in its main market Asia. They include the region’s restrictive travel rules during the Covid-19 pandemic, a slow vaccine rollout in Asia and fresh Covid-19 outbreaks caused by more contagious variants.
(Source: SCMP)
