Hong Kong Airlines to continue operations after receiving cash injection

victoria@aviationnews-online.com
By victoria@aviationnews-online.com December 6, 2019 11:55

Hong Kong Airlines to continue operations after receiving cash injection

Following the ultimatum issued by the government to Hong Kong Airlines to find a cash injection to pay its employees by 7 December or risk losing its operating license, the airline has found the sufficient capital to continue operations. 

While it hasn’t become public knowledge of where the cash has come from, many believe it is through its owners Hainan Group, which secured a loan of 4.4 billion HKD ($560 million), just days before the government’s deadline.

Hong Kong Airlines Chairman Hou Wei released a statement on Wednesday saying the airline would be receiving a cash injection that would be sufficient to keep it running under the terms set by the government.

The statement said: “Following urgent consultations, an initial cash injection plan has been drawn up. Outstanding salary to staff will be paid on 5 December 2019 and our services will gradually resume to normal as soon as the funds arrive.”

HNA owns 24 airlines including Hainan, Beijing Capital Airlines and stakes in TAP Air Portugal and Virgin Australia. 

Earlier this week, the group sold its majority stake in West Air to a Chongqing-government backed equity firm in a bid to cover overheads.

Chongqing Yufu Assets Management Group boosted its stake in the carrier from 14% to as much as 70%. HNA had previously held 84% of the airline.

The loan for Hainan Group, which has seen its net debt almost double in the past three years, will consist of a syndicate of eight banks which have signed a joint credit agreement with each lending $71 million.

Media outlet Yicai Global has reported that the lenders include two major policy banks, China Development Bank and China Exim Bank, Industrial and Commercial Bank of China and five of the country’s other largest commercial banks. HNA, its founder Chen Feng and CEO Tan Xiangdong will stand as guarantors.

victoria@aviationnews-online.com
By victoria@aviationnews-online.com December 6, 2019 11:55