On 9 December 2022, in the first restructuring to be implemented by way of a parallel and overlapping Hong Kong scheme and English restructuring plan, the English High Court approved a restructuring plan proposed by Hong Kong Airlines Limited (Hong Kong Airlines). The High Court of Hong Kong followed suit on 14 December 2022 and approved a scheme of arrangement on broadly the same terms.
The approved restructuring has saved Hong Kong Airlines from imminent liquidation and aims to secure its continued existence as a going concern.
Background
Founded in 2006, like most airlines around the world, Hong Kong Airlines struggled to stay afloat amid the COVID-19 pandemic. Strict COVID restrictions in mainland China, alongside reduced demand for international travel, posed significant challenges to the airline's operation and consequently, its financial liquidity.
The restructuring plan
With its air transport license due to expire in March 2023, the airline needs to demonstrate its financial viability to the Air Transport Licensing Authority. The approved restructuring aims to enable the airline to secure its license renewal and save it from liquidation through restructuring its debt, injecting new equity, and reducing its fleet size.
What’s next?
With the reopening of borders and the easing of COVID-19 restrictions in China, there seems to be a ray of hope for Hong Kong Airlines’ recovery and future.
Find out more
To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team.
Re Hong Kong Airlines [2022] EWHC 3210 (Ch)(English court decision)
Re Hong Kong Airlines Limited [2022] HKCFI 3792(Hong Kong court decision)
