Hong Kong’s Star Ferry is struggling to cover salaries, pay off loans after logging HK$70 million in losses over past 2 years
- The company’s general manager says it has gone into ‘negative equity’, and does not expect to be able to pay off its debts even after 2047
- ‘In view of the threats posed by the current environment, I am afraid I can’t be optimistic … for Star Ferry to survive this wave,’ says David Chow
Hong Kong’s iconic Star Ferry is having difficulty covering its employees’ salaries and paying down loans, saying it expects to still be in debt even after 2047 following two years of losses totalling more than HK$70 million (US$8.9 million).
The Star Ferry company said it was now worth less than it owed after the economic shocks of the social unrest of 2019 and the Covid-19 pandemic, pointing out that the “catastrophic impact” of the ongoing fifth wave of the health crisis threatened its very survival.
David Chow Cheuk-yin, the company’s newly appointed general manager, revealed in a statement on Monday that the firm had accumulated losses of more than HK$70 million over the past two years, saying ridership in the first two months of 2022 had plunged by 73 per cent compared with the same period in 2019.
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In 2021, the company’s ferries carried only 9.57 million passengers, a sharp drop of 46 per cent from 17.97 million passengers in 2019.
“It is disheartening to see our iconic Star Ferry is now a company with negative equity,” he said. “In view of the threats posed by the current environment, I am afraid I can’t be optimistic, as much as I would love to be, for Star Ferry to survive this wave.”
The company said it relied on borrowing to pay for daily expenses, as monthly revenue was not even sufficient to pay employees’ salaries.
“Enormous losses have far exceeded the company’s total assets. The Star Ferry has struggled with negative equity for a long time, and now counts completely on loans to cover daily operating expenses,” Chow said.
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Chow went so far as to say that the company might not even be able to repay the loans for another 25 years.
“The government reminds the public … ‘Borrow only if you can repay!’ In order to maintain services, Star Ferry, however, has no choice; the company probably cannot repay the loan even after 2047,” he said.
Star Ferry has already reduced services on its Wan Chai-to-Tsim Sha Tsui and Central-to-Tsim Sha Tsui routes, with trips starting later in the morning and ending earlier at night.
