Ex-minister back in the pilot's chair

The former government minister who stepped down to take political responsibility for a 1998 China Airlines (華航) crash that killed 202 people is back in the pilot's chair.

The China Aviation Development Foundation (航發會), which owns 70 percent of the shares of China Airlines, yesterday appointed Tsai Chao-yang (蔡兆陽) as its chairman.

Tsai, who replaces Chang Chun-yen (張俊彥), is a former minister of transportation and communications. Chang was grounded just one year into his four-year term as chairman.

Yesterday's shake up is widely believed to be politically motivated.

The change is the foundation's second since President Chen Shui-bian (陳水扁) stepped into office and comes at a time when the foundation is still struggling to decide whether or not it will carry out a long-awaited share sale.

The abruptness of the move has fueled rampant speculation from local media regarding the true meaning behind the shift.

Tsai served under former president Lee Teng-hui (李登輝). Political watchers say his appointment is a favor in return for Lee's support in the year-end elections.

But responding to questions yesterday, Tsai denied the allegations, saying that he felt very much a part of the China Airlines team.

The foundation held a board meeting yesterday, during which Chang resigned and Tsai was appointed, Chang and Tsai said in a joint statement.

Chang was elected as foundation chairman in June last year when the previous board's three-year term expired, making him the first chairman chosen by a non-KMT government since the airline was founded in 1959.

The Ministry of Transportation and Communications designates the foundation's candidates.

Currently, of the foundation's nine-person board, five directors are appointed directly by the government and another two are reviewed by the ministry before being elected.

Tsai's appointment may revive the long-delayed plan to sell some of the foundation's shares in China Airlines to a strategic partner, which was first announced in October 1998.

The plan collapsed in April last year after Salomon Smith Barney Inc, hired to manage the share sale in April 1999, failed to find a buyer that would agree with the board's terms.

Market watchers say the foundation was simply asking too high a price for the airline's shares.

While Chang was opposed to the sale plan, he said his resignation was the result of overwhelming obligations. Chang is also the president of National Chiao Tung University.

"The share sale will proceed through proper and fair procedures," Tsai said.

China Airlines has been dogged by safety issues, including an Airbus A300 crash that Tsai resigned over three years ago. The crash killed 202 people, including the governor of the central bank.

China Airlines' sales in the first six months of this year rose 4.6 percent to NT$34.1 billion from the same period a year ago.

China Airlines shares have fallen 8 percent since Chang took office on June 30 last year, compared with a 50 percent drop in the TAIEX over the same period of time.