Hong Kong Airlines’ US$6.2 billion debt revamp approved by creditors, hearings in Hong Kong and London courts

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Three groups of creditors vote for the restructuring proposal, while one faction raises objections

Hearings on the restructuring will be held in London on Friday and in Hong Kong on or before December 14 even as a separate wind-up petition drags on

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Hong Kong Airlines has received the go-ahead from creditors for its US$6.2 billion debt restructuring plan. Photo: Handout

Iris Ouyang

Published: 3:57pm, 5 Dec 2022Updated: 4:00pm, 5 Dec 2022

Creditors have approved the US$6.2 billion debt restructuring plan of Hong Kong Airlines, with the case set to be heard in Hong Kong and UK courts later this month, the South China Morning Post has learned.

Three groups of creditors, previously separated into unsecured creditors, critical lessors and perpetual note holders by the restructuring plan, voted for the proposal, despite objections from certain peers, according to people familiar with the matter.

An ad hoc group representing some bondholders, which claims to hold 40 per cent of the voting rights on HK$6.6 billion (US$841 million) of perpetual notes, said it would not challenge the decision given the low chance of reverting the decision.

The plan’s approval removes a key hurdle for the airline to tackle total liabilities of around HK$49 billion and to receive a new equity injection of HK$3 billion to alleviate a liquidity crunch.

Hong Kong Airlines in part of the bankrupt HNA Group logo. Photo: Reuters

Hong Kong Airlines has been hit hard by a slump in traffic since the social unrest in the second half of 2019 followed by the outbreak of the coronavirus pandemic. Since its parent HNA Group went into bankruptcy restructuring following Beijing’s clampdown on its aggressive asset acquisitions overseas, the carrier has suffered. It has seen profits slide, debt payments deferred and headcount cut by 65 per cent.

All critical lessors – who leased aircraft to the carrier with debt ownership – voted for the proposal, according to documents seen by the Post on Monday.

Hong Kong Airlines’ US$6.2 billion debt revamp approved by creditors, hearings in Hong Kong and London courts

Three groups of creditors vote for the restructuring proposal, while one faction raises objections Hearings on the restructuring will be held in London on Friday and in Hong Kong on or before December 14 even as a separate wind-up petition drags on

Three groups of creditors vote for the restructuring proposal, while one faction raises objections

Hearings on the restructuring will be held in London on Friday and in Hong Kong on or before December 14 even as a separate wind-up petition drags on