United Airlines Holdings Inc. is taking a $90 million (HKD700 million) non-cash charge in the 2019 fourth quarter to account for a steep drop in demand for flights to Hong Kong, which has been roiled by protests against the Chinese government for more than half a year.
Hong Kong International Airport, a major passenger and cargo hub, imposes landing and arrival authorizations, or slots, for carriers operating there – as do several other congested major airports such as New York’s JFK International and London’s Heathrow. These traffic restrictions require airlines to periodically assess the value of their slot portfolios.
“Due to a decrease in demand for the Hong Kong market and the resulting decrease in unit revenue, the company determined that the value of its Hong Kong routes had been fully impaired,” Chicago-based United said Tuesday in a regulatory filing.
In 2016, United took a $412 million charge after U.S. regulators removed slot restrictions at Newark Liberty International Airport, increasing competition at one of United’s hubs.
Visitor arrivals to Hong Kong in November fell 56% from a year earlier, the Hong Kong Tourism Board reported last week, including a 43% year-on-year decline from the U.S. MDT/Bloomberg