Hong Kong Airlines Ltd., the city’s only other competitor to Cathay Pacific Airways Ltd., is fighting for survival just as the busy Christmas season approaches.
The Air Transport Licensing Authority told the carrier that its finances had deteriorated so much that it needs to raise more cash or risk losing its license. The regulator will make a decision by Saturday, it said.
For Hong Kong Airlines, the ultimatum escalates a crisis that already forced the company to delay salary payments and cut flights to places such as Vancouver. More broadly, the move is the latest indication of how months of anti-Beijing protests in Hong Kong have roiled the city’s carriers — Cathay shares are trading near the lowest in a decade — as people avoid flying in and out of the Asian financial hub.
Visitor numbers in Hong Kong have plunged since the protests flared in June.
Though Hong Kong Airlines, backed by Chinese conglomerate HNA Group Co., doesn’t disclose its financials because it isn’t listed, the company has acknowledged it’s facing difficulties. On Friday, it said that protests have “severely affected” its business. The airline was already under strain as economic growth took a hit from the U.S.-China trade war, and facing scrutiny from authorities, who’ve been requesting updates and improvements on its financial situation this year.
ATLA said yesterday it found the situation “extremely worrying” after meeting with Hong Kong Airlines’ senior management and requesting them to explain the company’s finances. The Civil Aviation Department and Transport and Housing Bureau have also both demanded the company worked to improve its finances.
“HKA’s financial position has deteriorated rapidly,” ATLA said in its statement, which laid out two new licensing conditions: ensure a cash injection is made and that the company maintains levels of cash and equivalents determined by the regulator. It said if Hong Kong Airlines fails to improve its financial situation it could revoke or suspend the carrier’s license. MDT/Bloomberg