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Taiwan’s ailing TransAsia Airways shuts down due to financial woes

Taiwan’s troubled airliner TransAsia Airway on Tuesday announced that it is dissolving itself due to mounting financial difficulties.

Speaking at a hastily called press conference, the company’s chairman Vincent Lin said the regional carrier was losing NT$10 million (about US$90,000) daily, or NT$200 million to NT$300 million monthly.

“Why dissolve now? The company is not yet bankrupt, it still has more assets than debts. So the company does not want to wait until it’s bankrupt,” Lin said.

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Doing so now was in the best interests of its employees, customers and creditors, he said, adding that shareholders would meet in mid-January to approve the decision of the board of directors.

Earlier in the day, TransAsia Airway, which has a poor safety record, suspended all its scheduled services for the day, affecting 5,000 people and 84 flights, including seven domestic, five international and seven cross-strait routes.

Taiwan’s Civil Aeronautics Administration slapped the airline with a fine of NT$3 million for the suspension.

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TransAsia also issued a request to the Taiwan Stock Exchange to suspend trading in its shares. The bourse approved the request but fined the company NT$1 million for disclosing the suspension via a statement rather than by holding a news conference.

The Executive Yuan said the Financial Supervisory Commission and Ministry of Justice would launch an investigation into the carrier on suspicion of illegal insider trading.

The company’s booking service was shut down on Monday afternoon, prompting many to suspect it would suspend flights.

The carrier first denied the speculation, but then confirmed later in the day that it would suspend services for one day on Tuesday.

The move by Taiwan’s third-largest carrier came as a shock to the island’s airline and tourism industries as well as the government.

TransAsia has reported losses in each of the previous six quarters up to the end of September, hurt by a downturn in business following a disastrous crash on outlying Penghu Island in July 2014 and another in a suburb of Taipei in February last year.

The 65-year-old airline has a total of 44 routes, about 60 per cent of which operate between Taiwan and China.

The declining number of Chinese tourists since Taiwan’s President Tsai Ing-wen took office in May delivered a blow to the company.