(Bloomberg) Taiwanese carrier TransAsia Airways Corp. decided to close down operations after two fatal crashes in the last two years pushed it into losses.
After a board meeting early Tuesday, the Taipei-based airline said in a statement that it won't be able to repay convertible bonds due Nov. 29, but will compensate affected customers in full. The carrier was losing as much as NT$300 million ($9.4 million) a month, Chairman Vincent Lin told reporters in the city. Shareholders will vote on the decision on Jan. 11.
"We decided to dissolve the company when we're still able to handle creditors, passengers and employees," Lin said. "It's doubtful if we would be able to do it in six months."
At the center of air-safety investigations by authorities for the disasters in 2014 and 2015 that killed a combined 91 passengers, the company has reported losses in each of the past seven quarters totaling NT$3.4 billion, according to data compiled by Bloomberg. The carrier is also being probed by regulators for alleged insider trading in the company's shares prior to disclosures that it was halting flights on Tuesday.
Founded in 1951 as the island's first private airline, its shares started trading on the Taiwan Stock Exchange in late 2011. With a fleet of 16 aircraft, TransAsia flies to 27 destinations. The carrier had racked up NT$17.1 billion of liabilities as of Sept. 30.
"TransAsia was not efficient enough to compete with low-cost carriers and stimulate new traffic and did not have enough bulk to be relevant for the corporate market," said Will Horton, a senior analyst at CAPA Centre for Aviation in Hong Kong. "TransAsia's absence will not be felt significantly."
Trading in TransAsia's shares was suspended starting Tuesday, according to a company filing. The firm has $75 million of convertible bonds due November 2018 and NT$180.4 million of outstanding local-currency convertible securities due in October 2019, according to data compiled by Bloomberg.
TransAsia's stock slumped 7.1 percent to NT$5.20 on Monday before the suspension, with more than 10.7 million shares changing hands, giving the airline a market value of NT$3.95 billion.
Breaching RulesThe Financial Supervisory Commission and the Ministry of Justice late Monday said they had initiated a probe into insider trading, while the Taiwan stock exchange earlier said it would fine the company NT$1.5 million for breaching corporate disclosure rules.
The island's Civil Aeronautics Administration said the airline should have gotten regulatory approval for the suspensions, which will affect 84 flights and about 5,000 customers. Taiwan's cabinet has directed affected customers to seek assistance from its Consumer Protection Committee.
Taiwan's labor ministry said in a statement that the carrier must negotiate with the 1,735 workers it laid off to ensure their rights are protected and avoid disputes.
In June this year, investigators examining the causes of the 2015 crash said the fatal accident involving a twin-engine ATR 72-600 aircraft could have been prevented had the crew correctly identified a malfunction and prioritized right actions to stabilize the flight path. The crash killed 43 people. Another in July 2014 claimed 48 lives.
The company's shares have fallen about 56 percent since the first of the disasters, while the benchmark Taiex index dropped 3.8 percent over the same period.
Creditors will monitor developments at the company, which has borrowed NT$11 billion in syndicated loans, Central News Agency reported, citing FSC Chairman Lee Ruey-tsang.
"We have not met your expectations and extend our apologies," Chief Executive Officer Liu Tung-ming said at a separate press conference in Taipei.
Source: Bloomberg News by Yu-Huay Sun and Debra Mao
from China Travel & Tourism News http://ift.tt/1iB6EFm |
No comments:
Post a Comment