Far Eastern Air Transport (FAT,
The CAA estimates that the company still owes domestic airports approximately NT$40 million (US$1.21 million) in departure and landing fees.
The default came to light after the Chinese-language China Times reported that a FAT company check to CPC Corp, Taiwan (CPC, 台灣中油) for NT$150 million bounced on Tuesday.
The check was to pay for aviation fuel.
CAA director general Billy Chang (張國政) said yesterday that the administration had begun to look into the company's financial situation.
Specifically, the administration will focus on some of the company's recent transactions, including the sale of its cargo station at Xiamen Airport in Fujian Province, China, and its joint operation with Angkor Airways of Cambodia.
"We want to know why the firm has not received monies that are owed to it," Chang said, adding that the amount was estimated to be more than NT$1.3 billion.
Chang said the company accumulated a loss of NT$3.3 billion last year, which was more than half of its capital.
He said the administration could consider applying to the court for a compulsory execution order if the company failed to pay its fees by Monday. The administration may also suspend the company's right to operate certain air routes.
He said the CAA had proposed several strategies to cope with the repercussions of the airline's financial crisis. However, he refused to give any details on the grounds that the administration was still investigating the case.
Meanwhile, the International Air Transport Association's Clearing House issued a formal notification to its members that it had suspended FAT's membership for running up debts that total US$848,000.
The measure means that FAT's flight tickets will no longer be recognized by other domestic and international airlines and passengers holding FAT tickets will not be able to transfer to other airlines.
Aside from domestic routes, FAT also operates direct flights to Borneo and Jeju, South Korea. It has also worked with China Eastern Airlines and China Airlines to offer connecting flights from Jeju to Beijing, Shanghai and Shenyang in China.
Problems could arise should FAT passengers need to take connecting flights to China from Jeju.
FAT also had its status changed to a stock requiring cash delivery by the GRETAI Over The Counter Securities Market yesterday as a result of the bounced check and related financial problems.
FAT public relations manager Hanson Chang (張有朋) said yesterday there were no financial problems to worry about.
He told the Taipei Times in a brief telephone interview that income due to be received later this month would help to pay the debts.
"The NT$200 million to NT$300 million income from our non-core operations coming in later this month will bridge the gap," Chang said.
With regards to the bounced check, FAT had struck a deal with CPC whereby it had agreed to pay NT$30 million in cash first, and issue three checks redeemable next Wednesday, on Feb. 29 and on March 5.
FAT reported a net loss of NT$3.91 per share as of Sept. 30 last year. Fourth quarter results have yet to be disclosed.
FAT shares fell to the daily limit for the second day in a row, closing at NT$6.96 yesterday.
Domestic airline companies suffered heavy losses last year, mostly because of the high cost of fuel and a significant decrease in the number of customers following the launch of the high-speed rail service.
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