FAT Taiwan Inc (遠東航空) chairman Chang Kang-wei (張綱維) yesterday urged larger local peers to take on the restructuring of TransAsia Airways Corp (復興航空) to mitigate fallout from the troubled carrier’s dissolution.
At a news conference in Taipei, Chang urged China Airlines Ltd (CAL, 中華航空) and EVA Air Corp (長榮航空) to consider undertaking the task to meet public expectations, while not ruling out FAT’s involvement should others decline.
“Precedents in Japan and the US show that dissolution is the worst possible outcome for the airline industry, with distressed carriers often restructured or merged with peers,” Chang said.
Keeping a carrier afloat would prevent large-scale disruptions on many fronts, including employees and debtors, Chang said.
Restructuring would preserve TransAsia’s passenger capacity, while other airlines have a responsibility to society to prevent travel disruptions, he said.
CAL and EVA, which had expressed interest in taking over some of TransAsia’s routes and pilots, should do more and assume the responsibility of restructuring the distressed carrier, Chang said.
Chang said that TransAsia unions should redirect their focus to appealing to CAL and EVA.
“Disputes about severance packages do not contribute to a long-term solution,” he said.
Chang said that restructuring must be led by an industry expert and acknowledged that he made many mistakes when he took leadership of the previously financially strapped firm — then named Far Eastern Air Transport Corp — in 2009 with no prior airline experience.
In 2008, FAT’s finances were rocked and it halted all flights as then-chairman Stephen Tsuei (崔湧) became embroiled in an embezzlement scandal and a breach of trust investigation involving NT$2.3 billion (US$72 million).
Chang, who is also chairman of Taipei-based real-estate developer Huafu Enterprise Co (樺福), stepped in to restructure FAT the following year using personal funds.
FAT resumed flights in 2011 and the Taipei District Court ruled the restructuring complete last year.
Despite FAT’s smaller scale in terms of routes and fleet, the carrier has outperformed its larger peers in recent years.
FAT saw net income trend higher from NT$39 million at the end of 2013 to NT$205 million in 2014, filings with the Taiwan Stock Exchange showed.
The company reported that net income last year rose to NT$11.4 billion, or earnings per share of NT$38.33, outpacing the profitability of CAL and EVA in the same period.
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