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Monday, Sep 21, 2020

Hundreds of Hong Kong Airlines crew facing axe as cash-strapped carrier battles to stay afloat

Several hundred jobs at risk as ailing airline looks to cut costs following loss of long-haul routes and aircraft. Pilots and cabin crew in firing line less than a month after HKA came close to collapse

Hundreds of Hong Kong Airlines pilots and cabin crew are facing the axe as the struggling carrier battles to stay afloat.

After narrowly avoiding going out of business in December – when only a last-minute cash injection from its indebted owner HNA Group stopped the government revoking its licence – the airline has to cut costs to avoid running out of money again.

One of the conditions imposed in December by the Air Transport Licensing Authority (ATLA) was for HKA to maintain and improve its cash balance.

Industry sources have said several hundred jobs could be lost. As of January 1, the ailing airline continued to employ 3,481 people. But the loss of its long-haul routes, and a reduction from 39 planes to 28 is likely to see that number slashed. The potential for heavy job losses could dwarf the 600 cut Cathay Pacific at its headquarters in May 2017.

Pilots, the single most expensive employees on the payroll, are at greatest risk. According to some who talked to the Post as many as 200 aircrew are vulnerable, while of the 1,573 cabin crew – a number that has fallen from 1,926 since the start of last year – as many as a third of flight attendants’ jobs could be at risk, sources estimated.

When asked about the size and scope of possible cuts in frontline staff, the airline did not dispute the numbers provided by the Post.

A company spokeswoman said it adjusted “our staff strength from time to time based on operational needs.”

The company added: “We have sufficient manpower to run our operation and deliver the best service to all our customers.”

Airline sources said it would need 300 pilots at most, after the rest of its planes were either surprisingly impounded by Hong Kong airport’s operator, or returned to aircraft leasing companies last year.

Industry sources said pilots and aircraft were generally needed in a ratio of 10:1, while the exact number of flight attendants surplus to requirements remained unclear.

The potential for large lay-offs came as some local media reports on Wednesday suggested 20 staff in a variety of head office positions, and some pilots, had been axed on New Year’s Eve.

On December 30, the airline was sued by yet another aircraft lessor, Awas Leasing One LLC, for unpaid rent in excess of US$2.9 million (HK$23 million).

The legal action filed in the High Court came three weeks after another company, Alafco Irish Aircraft Leasing Sixteen, sued the airline for allegedly failing to settle a payment of more than US$34.5 million.

The Transport and Housing Bureau and ATLA said in identical statements they would continue to closely monitor HKA’s financial situation and its airline operations, in particular during travel peak seasons, and they said they would “take appropriate actions in light of the circumstances as necessary”.

With a growing list of creditors awaiting payment for planes, in-flight entertainment or for the use of its airport, the troubles of Hong Kong’s third largest airline are far from over. Early this month, the airline was criticised for failing to pay staff salaries for the month of November on time.

“If HKA is positively overstaffed for the anticipated business volume of 2020, job cuts are inevitable. It depends on where HKA is in that chain,” said Asia transport analyst Luya You of brokerage Bocom International.

“If they’re trying to get rid of multiple aircraft and basically reduce fleet size, then job cuts are a near definite. But if they keep the fleet, cuts are less certain. It depends on their baseline level of staff. They could be overstaffed if in early 2018 as they were hiring in anticipation of another expansion year in 2019-2020.”

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