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CAL giving up seat on FAT's board

"Our position is kind of awkward ... on the one hand, we sit on the board as a shareholder, but on the other, we are also a creditor."

Annie Huang, China Airlines public relations manager

China Airlines (CAL, 中華航空) announced yesterday that it was giving up its seat on the board of debt-ridden Far Eastern Air Transport (FAT, 遠東航空).

It was giving up its seat to avoid a conflict of interest, the company said in a press release.

"Our position is kind of awkward," PR manager Annie Huang (黃元玥) said. "On the one hand, we sit on the board as a shareholder, but on the other, we are also a creditor" seeking to protect our interest in FAT.

FAT owes CAL cargo fees and passenger fares, she said, declining to say how much.

"By our move, we are giving FAT more room for adjustment, and hope that there will be greater opportunities for cooperation," Huang said.

China Airlines owns 34.75 million shares, or 5.73 percent, of FAT stock.

FAT said yesterday that a NT$25 million (US$788,000) check to Ta Chong Commercial Bank (大眾銀行) had bounced.

Company spokesman Hanson Chang (張有朋) said the check was part of the company's long-term liability of NT$9.92 billion as listed in its Sept. 30 financial statement last year.

FAT also failed to pay NT$44.86 million in landing fees that it owes to the Civil Aeronautic Administration as promised on Monday.

The Chinese-language newspaper Commercial Times reported yesterday that FAT still had a potential liability of NT$2 billion.

Chang refused to comment on the report.

She said, however, that FAT's management would soon unveil its financial restructuring plan.

The Taipei District Court said FAT failed to submit a NT$5,000 processing fee when it filed its request for financial restructuring on Thursday night. If the company does not pay the fee within five days, the court said it would reject the request.

Chang said the company had appointed a lawyer to take care of the legal procedures.
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