In a much-needed relief for Hong Kong Airlines, the Hong Kong High Court has approved the airline’s $6.3bn debt restructuring plan. This will boost the airline’s survival chances following a tough year of financial upheaval.
In yesterday’s hearing, Justice Jonathan Harris said the court was sanctioning a so-called scheme of arrangement for Hong Kong Airlines. Counsel for the carrier, which is backed by bankrupt Chinese conglomerate HNA Group, said there was no opposition to the plan. A court in the United Kingdom approved the plan on December 9, 2022, with the court in Hong Kong approving it on 14 December, the airline said in a statement.
Hong Kong Airlines plans to jettison 33 aircraft from its 53-strong fleet, while HNA Aviation will oversee the issuance of new shares to an investor to raise about HK$3 billion for the airline.
The airline was struggling financially even before the COVID-19 pandemic due to anti-government protests in 2019. As of December 31, 2022, the airline had HK$49 billion of debt with around 46%, or HK$22.5 billion, owing to financial and operating lessors of aircraft and aviation parts, the largest group of creditors. Its 13.4% indebtedness or HK$6.56 billion was owed to holders of the perpetual bonds.
With Hong Kong Airlines’ transport license renewal due this month, the court’s decision is a welcome change for the airline.
HNA Aviation and other unnamed joint venture partners are investing HK$3 billion in exchange for the issuance of new ordinary shares in the carrier, which will represent at least 94% of the issued shares of Hong Kong Airlines, as part of the broader restructuring.