Hong Kong Airlines Saved, For Now?
Hong Kong Airlines, which has been on the brink of collapse, seems to be saved after receiving a cash injection. Local media reported that the embattled airline received fresh funds to cover the salary payments of their employees, which allows the airline to continue operating its flights. The airline did not wish to comment about the source of the financial injection. Already earlier this week, Hong Kong Airlines received a three-year loan worth half a billion euro from Chinese investment group HNA, which is the main shareholder of Hong Kong Airlines. The loan was granted in cooperation with eight local banks.
Shrinking route network
The new capital injection comes as a huge relief for Hong Kong Airlines, which is the second-largest airline in the financial hub of Hong Kong after Cathay Pacific. Local aviation authority ATLA threatened one week earlier to revoke Hong Kong Airline’s licence if the company would not improve its finances, describing the situation within the airline company as “extremely worrying”.
To cut costs, Hong Kong Airlines has already announced that it will terminate a few of its routes. Most notably, long-haul flights to Vancouver (Canada), as well as to Los Angeles (United States) will be fully terminated by February 2020. The airline’s route to San Francisco was already terminated earlier. Regional routes to Tianjin (China) and Saigon (Vietnam) will also be scrapped by the airline. The cancellation of its long-haul routes to North America makes Hong Kong Airlines, which has a fleet of several Airbus A320s, A330s and A350s, a purely regional airline.
Hong Kong crisis
The crisis at Hong Kong Airlines is a direct result of the ongoing crisis in the semi-autonomous Chinese city state. For months, protesters have take the streets to show their opposition to a bill which would allow criminal fugitives to be extradited to mainland China. Locals feat that the law would open the doors to a crackdown on free speech and democracy as they argue it would give China the right to arrest and extradite political opponents. Mass protests in Hong Kong have even hit the international airport on several occasions during the last month, halting air traffic. At times, local protests were met with extreme police violence.
The ongoing crisis caused a huge decrease in visitor numbers to Hong Kong as both tourists and businessmen stayed home. Last October, visitor numbers fell 44 percent. Also Cathay Pacific has been hit hard by the decrease in passengers, although the airline has a much larger financial buffer to cope with the ongoing crisis.
