Crippling Hong Kong Airlines announced that they will be cutting more than 400 jobs and have asked their staff to go on unpaid leave. The airline made the announcement two days after Hong Kong national carrier, Cathay Pacific asked their 27,000 employees to go on three weeks no-pay leave.
As Hong Kong is located next to mainland China, the Hong Kong aviation and tourism industry was greatly impacted. As the Coronavirus outbreak worsens in China, travel demand to and from China have greatly declined. Moreover, countries implemented travel restrictions causing a further decline in passengers travelling to Hong Kong and China.
Hong Kong Airlines suffered greatly from the anti-government protests which started in 2019. The anti-government protest caused a sharp fall in travel demand to China and with the new travel restrictions to and from China and Hong Kong, can the airline survive this epidemic?
In December 2019, the Hong Kong government warned the airline to draw up plans to raise money or risk losing its operating license. The airline did manage to raise money and maintain a certain cash level, thus, the Hong Kong government decided to allow the airline to continue to operate. Even with that cash injection, the airline is again struggling financially.
Cathay Pacific has already asked employees to take three weeks of unpaid leave as they believe that preserving cash was the way to survive this epidemic. The airline made this decision comparing the situation to the 2009 global financial crisis.
In an email, the company said in a statement: "There has never been a more challenging time in Hong Kong Airlines' history as of now. As uncertainty looms with the evolving nature of this global issue, weak travel demand will likely continue into the summer season and we need to take further action to stay afloat."
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