It was not invited to be one of the airline companies taking part in the Hong Kong-Singapore travel bubble. It was not involved in the transportation of vaccines imported to Hong Kong. And the latest news is that Hong Kong Airlines Training Academy (HKATA), a subsidiary of Hong Kong Airlines that provides crew training services, was sued by mainland Chinese bank Industrial Bank. The bank alleges that HKATA used a plot of land to apply for a mortgage loan from the bank but subsequently failed to repay the loan. The bank therefore demanded HKATA to surrender the land.
Hong Kong Airlines has been plagued by financial woes for more than two years. Recently, rumor has it that the future of the airline will be sealed this year. Coincidentally, a day after Industrial Bank took HKATA to court, Hong Kong Airlines’ main shareholder HNA Group reported a loss of 64 billion yuan. Currently, it is unable to pay off its debts.
Apple Daily previously reported that HKATA received a revolving loan from the Hong Kong branch of Industrial Bank in 2018. The maximum limit of the loan was HK$1 billion. According to industry insiders, it was actually not Hong Kong Airlines that took out the loan, and although the money borrowed was not the maximum amount, the size was in the hundreds of millions and definitely not small. Now that the bank has taken HKATA to court, it seems there is no turning back. Interestingly, when responding to media inquiry, Hong Kong Airlines said it is currently communicating with the bank. How much control does the airline has over its own finances? If it was not Hong Kong Airlines that took out the loan, who reached out to the bank on behalf of the airline?
New developments about Hong Kong Airlines and HNA often come at the same time. In February, it was reported that HNA’s creditors applied to a Chinese court for the group to be placed in bankruptcy and restructured because it failed to clear its debts. At the same time, Hong Kong Airlines was revealed to have failed to pay nearly HK$800 million in interest due on perpetual bond. Since then, rumors have been circulating among executives in the aviation circle, including that Hainan Airlines would be broken into parts to be taken over by different mainland airlines, and that Hong Kong Airlines would undergo a major restructuring this year.
Incidentally, Juneyao Airlines, whose biggest shareholder is Shanghai Juneyao, announced the other day its investment arm Shanghai Juneyao Aviation Investment Company and strategic investors with whom it has a long partnership will set up a firm to invest in airlines. A mainland news outlet reported that the airline company that the new firm will invest in is Hainan Airlines, which has been placed under a bankruptcy and restructuring process. But this remains a speculation.
Meanwhile, HNA Group remains in a precarious situation. When interviewed by the local media in mid-March, Ricky Chong, director of corporate governance and development of the airline, did not say anything about HNA. Still, what Chong said in the interview is worth reflecting on. He said he expected to see a wave of mergers and acquisitions involving small and medium-sized airlines in the future. One wonders if he was hinting something. Who will eventually take over Hong Kong Airlines now that its parent company has been placed under a bankruptcy and restructuring process? This is worthy of attention.
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