The troubled Hong Kong Airlines (HKA) on Thursday said it could not afford to pay almost half of its staff their salaries for November on time, delaying the payments until the first week of December.

In an internal note, the HNA-backed carrier’s human resources department blamed the protests, now in their sixth month, for its inability to pay the employees on time.

“Hong Kong Airlines’ business has been severely affected by the social unrest and a sustained weak travel demand,” the memo said. “With November being a low travel season as well, our revenue has reduced significantly, affecting our payroll for the month.”

The airline said its cabin crew and overseas staff would be paid on time, but all other staff would get paid on December 6. The decision will affect 1,600 staff, close to 45 per cent of the airline’s 3,560 employees.

The financial position of Hong Kong’s third largest airline has been so weak that the government had to intervene in its business earlier this month, demanding urgent improvements and placing it under more public scrutiny.

The Air Licensing Transport Authority – a statutory body with the power to shut down carriers and approve new ones – warned in late October it would impose measures if the HKA’s financial situation did not improve.

The airline earlier admitted it was going through a cash-flow problem, but its recent memo signalled it was lacking day-to-day cash as well, which means it is largely relying on revenue from air tickets to get by.

The income from passenger ticket sales has fallen for all Hong Kong airlines because of the ongoing civil unrest and the rising number of cancellations from existing bookings. Carriers, such as Cathay Pacific, have been able to offset the downturn by relying more on transit passengers, who bypassed Hong Kong, with cheap fares.

“We understand that this arrangement may cause you inconvenience and sincerely apologise for it,” the airline said, appealing to its staff to accept the problems it was facing. “We hope to seek your continued support to help Hong Kong Airlines overcome the current challenges.”

Hong Kong Airlines has stopped flying a quarter of its 39 planes, made cutbacks on flying affecting almost a dozen destinations, shrunk its employee numbers and made employees take several days of unpaid leave a month, in a bid to tide itself over during its financial crisis.

As of November 4, the Transport and Housing Bureau felt that the airline’s finances had not improved much.

David Yu, a professor of finance at New York University, Shanghai, said: “When an airline or a company has to delay normal cash expenditure activities such as payment of salaries, it does not reflect highly on its status.”

The carrier said in late August that its advance bookings had collapsed by 30 per cent year on year due to the protests.
Between August and October, the number of passengers arriving at Hong Kong International Airport had fallen around 2.3 million compared with the same period in 2018.