Hong Kong statutory body Air Transport Licensing Authority (ATLA) has set a deadline for Hong Kong Airlines (HKA) to improve its financial condition or lose its operating licence.

HNA Group affiliate HKA has been facing ongoing financial difficulties amid anti-government demonstrations in the country.

The company’s deteriorating financial position could impact the carrier’s normal functioning. HKA is currently in such a dire state that it has even failed to pay salaries to its employees on time.

Since December 2018, ATLA has been monitoring the airline operator’s financial situation in compliance with Regulation 15D(1) of the Air Transport (Licensing of Air Services) Regulations (Cap. 448 Subsidiary Legislation A).

The regulatory body has also made the public aware of the carrier’s situation and continually requested HKA to come up with financial improvement plans.

In view of this, ATLA has provided new conditions to HKA’s licence according to Regulation 15E (2)(b) of the Regulations to enhance its financial situation to a level acceptable to ATLA by 7 December.

An ATLA spokesman said: “In accordance with the two new licence conditions attached by ATLA, HKA must, by a deadline set, ensure cash injection at a level determined by ATLA (or provide an alternative to the satisfaction of ATLA), and raise and maintain its cash and cash equivalent level as stipulated by ATLA.

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“If HKA fails to improve its financial situation as required by ATLA by the deadline, ATLA will take further action under Regulation 15E of the Regulations, which provides for revocation or suspension of licence.”

Meanwhile, HKA has said that it has implemented cost-saving measures to improve its financial situation.

In a statement, HKA said: “As weak travel demand resulting from the social unrest in Hong Kong has continued to affect our business and revenue, Hong Kong Airlines has reduced its capacity and flights in the coming months as well as further consolidated its network under the challenging business environment.

“Hong Kong Airlines is actively communicating with our shareholders and other stakeholders to meet the new requirements from ATLA as requested. We will remain professional and deliver our best customer service to all passengers.”