Hong Kong carrier halts operations as losses swell

HONG KONG (MarketWatch) -- Oasis Hong Kong Airlines, struggling amid mounting losses, said Wednesday it grounded its aircraft as the carrier halted operations and asked the Hong Kong High Court for protection as it explores how to liquidate assets.

Chief Executive Stephen Miller told reporters that all Oasis flights were being canceled immediately.
"It is with great regret Oasis Hong Kong has today voluntarily applied to the Hong Kong court to appoint a liquidator," wire reports cited Miller as saying at a press conference.
Miller added he was confident a buyer would emerge for the airline but didn't elaborate on any talks taking place.
Accounting firm KPMG said in a statement that it had been appointed provisional liquidator by the airline. A spokesman for KPMG said the firm was exploring the company's options.
No formal reasons were given for the airline's insolvency, although government transport officials were cited as saying the carrier suffered from financial difficulties.
Phone calls made to the airline's office in Hong Kong went unanswered. The Oasis Web site made no mention of the service suspension, but its online booking function was disabled for "system maintenance."
The Hong Kong-based carrier, which flies routes to London and Vancouver, reportedly had accumulated a loss of HK$1 billion (US$128 million) since its launch in October 2006, according to the Chinese-language business daily Hong Kong Economic Times.
In recent days, four U.S. carriers have ceased operations in the face of huge jet-fuel costs and sharp competition.
Oasis operated four Boeing 747-400 aircraft. The airline earlier said it was planning to expand and had applied for licenses to serve San Francisco, Chicago, Bonn, Berlin and Milan.
Hainan Airlines Co., which is China's fourth-largest carrier and is backed by the investor George Soros, may be interested in purchasing Oasis, according to a Reuters report. Hainan Air was said to be eyeing Oasis to gain access to Hong Kong's aviation market.
Hong Kong-based fund Value Partners, which made a $30 million convertible bond investment in the airline in October through a private-equity fund, said potential losses from the investment would not have any a significant impact upon the performance of the group's fund products.
"The amount involved is less than half a percent of Value Partners Group's total assets under management," the fund house said in a statement Wednesday.
Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.