MOTC proposes NT$30 billion bailout fund, China Airlines issues NT$10 billion in bonds as aviation industry faces virus crisis
The Ministry of Transportation and Communications (MOTC) has proposed an NT$30 billion bailout loan package for Taiwan’s six airlines, but the plan has not yet been approved by the premier, according to Executive Yuan Spokesperson Kolas Yotaka.
A previous bailout package was approved to the tune of NT$4.8 billion, but MOTC Minister Lin Chia-lung indicated recently that the figure may be raised to NT$30 billion because the aviation industry requires capital turnover.
Today’s announcement comes on the same day that China Airlines’ Board of Directors announced they would issue up to NT$10 billion dollars in bonds to cover debt repayment.
China Airlines also reported its 2019 financial report today, showing that the company faced a loss of NT$1.2 billion last year, constituting the first loss in five years. The board of directors decided to suspend dividend payments in the light of the report.
Already reeling from cancelled travel plans due to the novel coronavirus epidemic, the aviation industry is grinding to a halt as countries close their borders. Even the government of Taiwan has announced a ban on entry for foreigners starting tomorrow, March 19.
The International Air Transport Association (IATA) estimates that the global aviation industry will face losses in the vicinity of USD 113 billion (about NT$3.41 trillion).
In an interview with Business Today, Starlux Chairman Chang Kuo-wei was relatively upbeat about his new airline’s position in the midst of the crisis.
Having launched his airline on January 23, the aviation entrepreneur flew into headwinds within weeks of the launch, being forced to suspend flights to Macau in February, as the coronavirus epidemic spread in China, then suspending flights to Penang, Malaysia in March. This left the fledgling airline with only one flight per day operating between Taipei and Da Nang, Vietnam.
In the Business Today interview, titled “How deep are Chang Kuo-wei’s pockets,” Chang looked at the positive side of his position.
“We are actually very lucky,” Chang said, while smiling.
Compared to China Airlines and EVA Air, Starlux has a relatively small fleet, Chang pointed out.
“Although the groundings have caused a loss in revenue, Starlux currently has only three aircraft and around 1,000 employees, compared to China Airlines with 80 aircraft and 12,000 employees, and EVA Air with 90 aircraft and 19,000 employees,” Chang told Business Today.
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