Most of the creditors of Hong Kong Airlines have voted in favour of supporting the $6.3bn debt restructuring plan. Three groups of creditors vote for the restructuring proposal, while one faction has raised objections. The hearing on the restructuring will be held in England this Friday, December 9, 2022, and December 14, 2022 in Hong Kong, the airline said in a statement.
The airline plans to clear total liabilities of around HK$49 billion and to receive a new equity injection of HK$3 billion to alleviate a liquidity crunch with this restructuring plan.
As per sources, three groups of creditors, previously separated into unsecured creditors, critical lessors, and perpetual note holders by the restructuring plan, voted for the proposal, despite objections. An ad hoc group which claims to hold 40% of the voting rights on $841 million of perpetual notes, said it would not challenge the decision given the low chance of reverting the decision.
All critical lessors who leased aircraft to the carrier with debt ownership voted in favor of the proposal, according to documents.
During the creditors’ meetings on November 25, 2022, and December 1, 90.8% of unsecured creditors owning HK$20.29 billion yuan voted for the restructuring plan. In the perpetual bond creditors group, close to 80% voted for the proposal.
Hong Kong Airlines claims to restore financial stability and resume trading of its securities and reduce its debt burden via the restructuring.
Even prior to the pandemic, the airline was under financial debt due to anti-China protests in 2019. Due to its inability to make payments, several of the aircraft were seized by airport authorities.
During the pandemic, the city was worse hit as the air traffic completely stopped in 2020, and even after the global pandemic restrictions were relaxed, Hong Kong still complied with one of the longest durations of quarantine.
Apart from Hong Kong Airlines, other Asian carriers like PT Garuda Indonesia, Philippine Airlines, and Thai Airways International have been forced to restructure.