Hong Kong Airlines (HX, Hong Kong International) has again come under regulatory scrutiny following a recent slew of lawsuits filed against the airline by creditor firms.
Having managed to repay a USD550 million bond with interest to the Blue Sky Fliers Co. in January despite strong media speculation it would default, Hong Kong Airlines has been hit by at least three more lawsuits. The first, by Macau-based financing house, Luso International Banking (LIB), was filed shortly after the bond repayment and is to recover a USD20 million loan. The second and third suits were filed by lessors ILFC (now AerCap) and Wilmington Trust SP Services (Dublin) Limited respectively for unpaid leasing dues amounting to around USD19 million.
In light of these suits, Hong Kong's Air Transport Licensing Authority (ATLA) said in a statement on Wednesday, February 27, that it was "gravely concerned" about the state of Hong Kong Airlines' finances.
"ATLA has, in accordance with the Air Transport (Licensing of Air Services) Regulations (Cap. 448 Subsidiary Legislation A), requested HKA [Hong Kong Airlines] to explain the situation," the regulator said.
It added that it would take any actions necessary to protect the public interest.
The ATLA's inquiry comes at a time when Cathay Pacific (CX, Hong Kong International) has been linked to equity in both Kong Kong Airlines and its low-cost sister carrier HK Express (UO, Hong Kong International).
According to Bloomberg, sources familiar with developments have confirmed that Cathay Pacific has held preliminary talks with HNA Group about acquiring minority stakes in Hong Kong Express Airways Ltd. and Hong Kong Airlines Ltd.
The two HNA Group carriers would be attractive to Cathay because of the attractive route authorities they possess, the sources said. Talks are said to have been progressing slowly, with no certainty they will result in a transaction, they added.
