TAIPEI, Taiwan — The Civil Aeronautics Administration (CAA) will partially or fully withdraw Far Eastern Air Transport Corp.’s (FAT) freedoms of the air if the heavily indebted carrier fails to solve its operational problems by June 2, a CAA official said yesterday.
CAA Director-General Billy Chang said his agency had requested FAT 10 days ago to address its problems by Monday.
FAT failed to meet the deadline, however, prompting the CAA to fine the airline NT$3 million (US$98,304) and its chairman, Spencer Pai, NT$1 million.
Chang noted that Pai resigned last week, but because the airline did not inform the CAA in writing of Pai’s resignation, he was still considered to be FAT’s chairman.
FAT was asked to solve problems over unpaid wages, aircraft lease disputes, insufficient cash flows, and the illegal appointment of its general manager, according to the agency.
The CAA will again ask FAT to submit financial statements for last year and the first quarter of this year, Chang said, adding that the carrier will face additional fines if it refuses.
The lack of financial statements was also one of the reasons behind the Taipei District Court’s rejection of the debt-ridden carrier’s application for bankruptcy protection Monday.
Chang said that at present, four groups of local and foreign investors were negotiating with FAT over possible injections of capital, but no conclusion has yet been reached.
FAT can resume its operations if it receives an injection of NT$2 billion, he stated. The airline suspended operations on May 13, unable to foot the bill for basic operating costs. But Chang warned that if the CAA rescinds part of FAT’s freedoms of the air, no one will invest in the airline.
The CAA has also prepared for the worst, Chang noted, adding that if FAT formally ceases operations, local consumers who have purchased FAT plane tickets from local travel agencies can demand refunds.
Meanwhile,the court’s rejection of FAT’s restructuring application will terminate the trading of the airline’s shares on the over-the-counter (OTC) market.
FAT shares would be delisted 40 days after the Securities and Futures Bureau approves the OTC market’s delisting request that will be made based on the court’s decision, said Ko Fu-lung, senior vice president of the GreTai Securities Market’s listing supervision department.
However, Ko said that FAT can still appeal against the court’s ruling and delay the delisting of its stock.
Furthermore, if FAT can publish its financial reports eight working days prior to the delisting, it will be able to resume its OTC trading.
Trading of FAT shares was temporarily suspended on Feb. 25 after the airline failed to produce its 2007 financial statements. The company’s shares last traded at NT$4.52 per share on Feb. 22.
FAT, Taiwan’s oldest privately owned carrier, filed for bankruptcy protection Feb. 15 after reporting debts of NT$9.99 billion at the end of September 2007.
In response to the ruling, which will force the 51-year-old carrier to clear its debts and liquidate its assets, FAT spokesman Lee Yiu-teh said the company would file an appeal.