Hong Kong Airlines shrugs off cash flow concerns and says ‘it’s business as normal’ despite being under growing financial strain
- Troubled carrier had delayed delivery of new planes, seen a host of senior managers quit and experienced trouble paying staff
- But in stock exchange filing the airline says it will be able to pay US$550 million debt on time
Hong Kong Airlines has insisted it will be able to meet its financial obligations, despite sources saying it had been under growing strain over the past 12 months.
Over that time the company had delayed delivery of new planes, reportedly paid staff late, and cut back on perks for employees at hotels, the sources said.
Against the backdrop of what appeared to be mounting cash-flow problems, the Post reported on Wednesday the government was working on a contingency plan should the airline collapse during the Lunar New Year next month, one of the busiest travel periods for airlines in the region.
However, in a statement released yesterday, the airline said that it “has been and will continue to operate as normal”.
One of the financial concerns involved a US$550 million debt due by January 20. But in a separate filing to the Hong Kong stock exchange by the company’s bondholder Blue Sky Fliers, the airline said it would meet that obligation. The bulk of the money is reportedly being lent by China Development Bank, the biggest creditor of the airline’s parent company, HNA.
In a statement issued on Wednesday, the carrier said: “We also value the good relationship with our service providers and communicate with them regularly to address outstanding issues.”
Although the airline did not go into specifics about the “outstanding issues”, this was the first time the company had acknowledged it was facing problems.
Meanwhile, the Post spoke to a range of employees who disclosed specific details of the company’s issues and painted a picture of a carrier that was not on an even keel. Last October, cabin crew’s monthly salary payments were delayed by one or two days, and flight attendants who earned commission did not receive their money until November 14.
In addition, payments to pilots changed over the past several months. After switching banks, a source said, pilots who expected to be paid at 9am on the day their salary was due typically received it several hours later.
The airline blamed the delayed payments on its US bank.
In the most recent example of belt-tightening, cabin crew were told that as of January 1, they would not be eligible for free food at hotels in Taipei or Sapporo during overnight stays, according to documents seen by the Post.
Airbus data released this week showed the airline has three A350s and one A330 stored in France waiting to be paid for. These are worth a combined HK$9.5 billion at retail price, before discounts are included.
An internal airline memo for overseas cabin crew said their HK$5,000 a month housing allowance would be changed to reflect length of service. Staff will get HK$7,000 a month housing allowance, there will then be a sliding scale, with those who have worked for the carrier for seven years or