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FAT says operations not affected by ICH suspension

Passengers flying to Cheju in South Korea board a Far Eastern Air Transport flight yesterday. The company said that all operations would proceed as normal despite its financial difficulties. PHOTO: CHU PEI-HSIUNG, TAIPEI TIMES

Amid concerns over its financial difficulties, Far Eastern Air Transport (FAT, 遠東航空) sought to reassure customers that its flights would not be affected by a temporary suspension of its membership in the International Air Transportation Association's clearing house (ICH).

With a total of US$84 million in outstanding bills, the ICH suspended FAT's membership on Wednesday until the airline company clears its debts.

"The [decision] will mainly affect flight transfers, but we have worked it out with our partners to protect the rights of our customers and ensure smooth luggage and passenger transfers," FAT spokesman Hanson Chang (張有朋) said by telephone.

Chang said that services for customers flying to northern cities in China, including Beijing, Shenyang and Shanghai via Cheju Island in South Korea, will proceed as normal.

In a statement released yesterday, FAT said it had net assets of NT$3 billion, with NT$1.4 billion in receivables, including the NT$700 million owed by Cambodia's Angkor Airways that is backed by US$39 million in assets as collateral.

The company estimated that losses as of Sept. 30 last year reached NT$3.4 billion.

Chang said the company expects to book a non-operating income of NT$230 million at the end of this month and take out another short-term loan from banks that should help pay off its debts in one month and resume its ICH membership.

The company is also considering leasing its Boeing 757 cargo aircraft to increase its cash flow, a FAT statement said.

Chang confirmed that the company would cut its capital and restructure its finances by inviting new investors in the second half of the year.

Shares of FAT are suspended from trading on the over-the-counter market from today.
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