HK Airlines to focus on Asia-Pacific growth despite CAD limit

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Hong Kong Airlines (HKA) says it is "sensible" for the country's civil aviation department (CAD) to limit its expansion through a new condition implemented on its air operator's certificate (AOC).

"We are wholly supportive of the decisions made by the CAD in relation to conditions related to our AOC. These are sensible for a company at our stage of growth," says the carrier.

It adds that over the past year, it has been in talks with CAD on what is an "appropriate number of planes" for its business strategy.

On 17 July, the regulator added a condition to HKA's AOC, listing the aircraft it currently operates. This means that HKA will not be able to operate any aircraft not listed under the AOC, until the condition is lifted by the regulator.

This is the first time the CAD has imposed such a term.

The CAD explained that HKA needs to show it has the "necessary equipment, organisation, staffing, maintenance and other arrangements" in place "to secure the safe operation of a larger aircraft fleet".

"Given the current economic conditions, and the profitability of our regional routes, we believe that we now have the optimal fleet to continue to build a business focused on Asia-Pacific, certainly in the short term," says HKA.

The carrier is also planning to phase out its fleet of five Boeing 737s and operate with a pure Airbus fleet to be more cost efficient. These 737s will be phased out as the carrier takes delivery of its new Airbus A320s and Airbus A330s.

"We will be providing further clarity around our route and fleet deployment shortly," it adds.

When asked about its initial public offering (IPO) plans, HKA declined to comment. It had earlier said that it plans to raise $300 million through an IPO offering in the third quarter of this year to fund new aircraft purchases.

HKA, a division of China's HNA Group, announced last November that it will receive more than 50 new aircraft over the next four years to expand its international and Chinese networks.

The carrier had previously said that it plans to grow into a bigger player in the market to compete with flag carrier Cathay Pacific.

HKA operates a fleet of 21 Airbus A330s and Boeing 737s. It has 65 aircraft on order, including Airbus A350s and Airbus A380s.