Hong Kong Airlines claims its fine, authorities not so convinced

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Hong Kong Airlines is another subsidiary of the deeply troubled and heavily indebted Chinese conglomerate, HNA Group.

In recent weeks it’s been thrust into the public eye with a series of six director level resignations amongst other issues hat seem to imply it may have over stretched itself, in line with the rest of the group that owns it.

One of the resignations was the Chief Financial Officer and it’s known that authorities want to investigate the airlines finances.

The problem for authorities is that the airline is not traded on the stick market and remains privately owned, making its far more difficult to analyse its financial performance and reserves.

Concern has being escalated by figures demonstrating that as the airline has expanded, its seat occupancy rates have fallen to levels that are basically financially unviable, especially on its long haul routes.

According to figures published through various route analysis companies, even as the airline expands its overall passengers from 6.3 million per year to 7.6 million, its seat use rates have fallen from a just viable 85%, to an unviable 80%. On top of that it’s not been able to increase fares, locked as it is in a fare war with Cathay Pacific and Cathay Dragon, and over the last year jet fuel prices have spiked.

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Authorities are so concerned they’ve asked the airline for a US$520 million bond to be deposited by January 20 2019 to cover any possible collapse costs. It seems unlikely they’ll have the resources to pay it, and what actually happens if they don’t is unclear.

Meanwhile the airlines marketing and PR managers have been trying to spin the situation towards a more positive viewpoint, but without much success.

The airline operates a mixed fleet of 43 aircraft consisting of 11 A320’s, 16 A332’s (5 of which are cargo), 10 A333, and 6 A359’s. It has six A359’s on order and 5 A330’s.

 

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