Hong Kong Airlines eyes restructuring over HK$49b in debts

Hong Kong Airlines has disclosed plans to file for debt restructuring in the Hong Kong and UK courts, in a move that will see the airline cut its fleet by more than half. In a 27 September statement, HKA says is seeking orders to convene a creditors’ meetings to consider and approve a scheme of arrangement in Hong Kong, as well as a UK restructuring plan. The airline, linked to China’s HNA Group, has debts amounting to over HK$49b ($6.2b), according to a practice statement letter released on the same day. Nearly half of the debts are owed to financial and operating lessors, at around HK$22.5bi, the letter states. Bank lenders and financial creditors, meanwhile, are owed HK$5.7b, while related party creditors are owed about HK$6.8b. The first hearing in the High Court of Hong Kong is set for 13 October, while the first hearing in the High Court of Justice of England and Wales will be held on 25 October. The airline hopes the restructuring process will help deliver a “strengthened and de-levered balance sheet, with lower overall gross debt”, as well as “rationalised rental payments” on a pared-down fleet of 20 aircraft, a significant reduction from the current fleet of 53 jets. HKA suffered the double whammy of political unrest in Hong Kong in 2019, followed by the collapse in travel demand from the coronavirus pandemic.<br/>