Macau lender Luso International Banking sues troubled Hong Kong Airlines over alleged failure to repay US$20 million loan

A Macau-based lender has sued troubled Hong Kong Airlines following its alleged failure to repay a US$20 million loan despite repeated demands.

Court documents revealed that Hong Kong Airlines International Holdings borrowed US$20 million from Luso International Banking in October 2017, on condition the principal be repaid with interest by December 28 last year.

But lawyers for the bank said the airline paid only US$257,934.44 after the deadline, on January 1, in breach of its contractual obligations.

The partial payment prompted the bank’s solicitors, writing on January 2, to demand the outstanding amount within seven days.

The bank also wrote to subsidiary Hong Kong Airlines Limited, now listed as the defendant, following its agreement to provide a guarantee.

“Despite repeated requests and demands … the borrower has failed to pay the outstanding indebtedness due and payable to the plaintiff, and the defendant has failed to pay the guaranteed amount to the plaintiff or any part thereof,” the writ said.

Hong Kong Airlines shrugs off cash concerns amid collapse fears

The legal action mounted in the High Court on Wednesday came amid concerns over the financial robustness of the city’s third biggest carrier.

The airline, backed by debt-ridden Chinese conglomerate HNA, operates 38 passenger aircraft to 36 destinations.

In December last year, its finance chief abruptly resigned after less than 18 months on the job, with no replacement appointed as yet.

Separately, six directors at Hong Kong Airlines have left since last July.

Among the departures was Tang King-shing, Hong Kong’s former police chief, who resigned as vice-chairman of the carrier’s board, citing personal reasons. Chief financial officer Jacky Lui Jiaqi and chairman Zhang Kui have also left.

HNA Group (Hong Kong) Investment later sued Hong Kong Airlines Consultation Service on December 28 for about HK$854 million in unpaid debt.

Troubled airline threatens to sue over ‘untrue and groundless’ rumours

According to the Companies Registry, the defendant in that action is owned by Zhong Guosong, a director of Hong Kong Airlines until August 21 and who is also executive chairman of HNA’s other carrier, Hong Kong Express.

Earlier this month, the Air Transport Licensing Authority said it had reviewed Hong Kong Airlines’ finances and demanded further clarification, which appeared to signal dissatisfaction with the carrier’s initial explanation in its financial presentation.

Meanwhile, an airline spokesman told the Post the company had been working with the bank to address the outstanding issue.

“This has no impact on our business and we are operating as normal,” he said.