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Hong Kong Airlines is delaying salaries as protests have “severely affected” the city’s third-biggest carrier, whose finances were already under strain before anti-government demonstrations flared in June.
Only cabin crew and overseas employees will receive their November wages on time, while all other Hong Kong-based workers will be paid on December 6, the closely-held airline said in an email Friday. It said revenue dipped significantly in November — a low travel season — and impacted the monthly payroll.
Authorities have been concerned about Hong Kong Airlines for months, regularly requesting updates on its financial situation. Representatives from the Transport and Housing Bureau and Civil Aviation Department met with the airline’s management on November 1 and demanded the company worked to improve its financial position. The Air Transport Licensing Authority, which has the power to revoke flying rights, has also expressed concern about the airline.
“ATLA is of the view that HKA’s financial situation has shown no sign of improvement,” the licensing body said last month, warning that it would “consider taking appropriate action” if no progress was made.
More than five months of anti-government protests have compounded the airline’s woes, weighing heavily on passenger traffic, while Hong Kong’s economy, already under pressure from the U.S.-China trade war, is in recession as tourist numbers plummet. The unrest has disrupted transport networks and temporarily paralyzed the airport in August, prompting Hong Kong Airlines at the time to say it would adjust services.
The situation in Hong Kong remains delicately poised. Street battles between demonstrators and armed police have eased, but there are still tension spots, such as Hong Kong Polytechnic University, the scene of a two-week standoff. U.S. President Donald Trump this week signed legislation expressing American support for the protesters, prompting China to threaten retaliation.
Hong Kong Airlines cut some operations earlier this month and plans to cancel Los Angeles-bound flights from February. Other airlines have been affected by the unrest too. Cathay Pacific Airways is one of the most high-profile business casualties, issuing profit warnings and coming under fire from the Chinese government as well as protesters. Singapore Airlines, China Eastern Airlines and Virgin Australia Holdings have all cut flights to Hong Kong, which is in danger of losing its status as Asia’s busiest airport for international traffic.
Cathay Pacific shares fell 0.8 percent Friday morning, heading for their first decline this week. They’ve slumped about 25 percent from an April peak.
“This one-off salary arrangement does not impact our daily operation,” Hong Kong Airlines said. “Our staff remains professional and are committed to delivering a safe and smooth service to all our customers.”
©2019 Bloomberg L.P.