Hong Kong Airlines secures $588M Loan from several state-owned banks
The latest news about the secured $568 million loans of the HNA Group from several state-owned banks comes fast. Such a move is significant to help boost the airline’s finances or just face the consequences of having its operating license suspended. Besides, theys released a statement that it would not be able to pay its staff’s corresponding wages for November not until the 6th of December. Still, Hong Kong Airlines remain committed to providing quality services to its passengers.
The loan was made on behalf of HKA which is allotted to pay the necessary wages of staff, airport charges, fuel, and even the aircraft lease payments. The public is thinking that the airline might be on the brink of bankruptcy and going out of the business. With those rumors going over about their company, Hong Kong Airlines was able to release a statement that they will continue to operate normally and will always be dedicated to flying its passengers to their desired destination safely. To give assurance to the public, they also released a statement featured on their website. It says that one factor why such things are happening is the weak travel demand due to social unrest in Hong Kong. This greatly affects their business and much more, their revenue. While still operating under the challenging business environment, Hong Kong Airlines was able to reduce and cut several routes in the succeeding month like all flights heading to North America which is effective February 2020.
The Air Transport Licensing Authority, the body who is responsible for overseeing every airline in Hong Kong, was able to give two conditions to Hong Kong Airlines that the company needs to meet and do to continue its operations. The first one is to inject more cash. After that, it needs to maintain the cash at an undisclosed level.
With the given conditions, the China Development Bank initiated the lead role to restructure the HNA’s debt together with eight other banks which include China’s biggest state-owned banks. The $568 Million loans should be paid in four years with an interest rate of 4.75%. The main reason for the financial trouble where HNA Group is currently is due to the debt-fueled aircraft acquisition spree. Also, the Hong Kong protests extremely affect the number of passengers flying. Still, the mainland authorities don’t want Hong Kong Airlines to fall.
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