Cathay in talks to help keep rival airline afloat

Top News | Tereza Cai 11 Jan 2019

Cash-strapped Hong Kong Airlines is in talks for assistance from several groups, including competitor Cathay Pacific Airways, according to mainland media.

China conglomerate HNA Group, which owns Hong Kong Airlines, has set up a task force that will look into the carrier forging an alliance with international airlines, according to reports.

Network coordination and equity cooperation are among key areas that are being looked into and will serve as basis for HNA's decision on whether to enter into any international alliance.

There are currently three major international airline alliances - Star Alliance established in 1997, One World founded in 1999 and SkyTeam set up in 2000.

HNA, which has not joined any group, used to be regarded as having "the world's fourth-largest airline alliance" as it operates several carriers, including Hainan Airlines, Beijing Capital Airlines, Hong Kong Airlines and budget airline Hong Kong Express Airways.

The international airline market has become increasingly competitive as more and more operators have expanded their footprints around the world in recent years.

Joining an international alliance can boost efficiency in international business operations though it will entail paying an admission fee and upgrade of operations.

China Southern Airlines said in November it would not renew an agreement with SkyTeam from January 1 this year.

Members of SkyTeam include China Eastern Airlines and Xiamen Airlines.

HNA is said to be more likely to join One World so the group can expand into the mainland and since Air China is already a member of Star Alliance.

However, one of One World's founding members, Hong Kong-based Cathay Pacific, has been aggressively competing against HNA's Hong Kong Airlines and HK Express.

Hong Kong Airlines said on Friday that it has been operating normally.

It said it plans to operate close to 1,080 flights during the upcoming Lunar New Year holidays from February 1 to 10 and it expects to carry more than 224,000 passengers.

Hong Kong Airlines has been reported to be suffering a cash crunch since US$550 million (HK$ 4.29 billion) worth of bonds it issued will become due on January 20.

China Development Bank has been reported to be willing to bail out the Hong Kong-based airline. The lender, HNA Group's largest creditor, is said to be considering providing loans as long as arrangements are forged for Hong Kong Airlines to pay them back.

The Hong Kong government has declined to say if any contingency measures have been drawn up in the event Hong Kong Airlines ceases operations.

Travel sector lawmaker Yiu Si-wing said tour agencies have paid for air tickets for trips during the New Year holidays.

A contingency plan will be of little help if the airline closes down during the holidays as all flights are fully booked, Yiu added.

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