On Monday, TransAsia Airways suspended flights and its stocks, shocking travelers and investors.
The Wall Street Journal reported:
All of the carrier’s 84 flights on Tuesday were canceled, stranding around 5,000 passengers according to Taiwan’s Civil Aeronautics Administration. TransAsia’s shares on the Taipei exchange were suspended.
The airline spread the news on Facebook and Twitter:
復興航空聲明稿 2016/11/21
— TransAsia 復興航空 (@TransAsiaAirway) November 21, 2016
對於本公司明日停航一天，復興航空表示，明天將召開臨時董事會，並於會後向社會大眾說明。對明天全天受影響的旅客，致上最深歉意，處理方式說明如下：... https://t.co/uGxRycsxFH
Roughly translated, the posts say:
This company is suspended for one day tomorrow, Transasia Airways said that tomorrow will be the interim board of trustees held on, and after the note to the community. All day tomorrow for the affected passengers, to the deepest apologies…
The posts also explained the refund process for affected passengers.
On Tuesday, during an emergency board meeting, the company said in a stock filing that it was shutting its doors. It also reported that it won’t be able to repay convertible bonds due Nov. 29, but promised that it will compensate affected travelers.
TransAsia’s chairman, Vincent Lin, told reporters:
We decided to dissolve the company when we’re still able to handle creditors, passengers and employees. It’s doubtful if we would be able to do it in six months.
The decision to shutter the airline’s doors comes after two fatal crashes in the span of seven months, which deeply affected TransAsia’s reputation.
The company has continuously lost money, and its shares have been sliding since the crashes in 2014 and 2015 raised questions about the safety of its planes.
Those recommendations, from the country's Aviation Safety Council, followed an investigation into an incident in July 2014, when Transasia flight 222 crashed in a heavy storm near Magong Airport on Taiwan's Penghu island, leaving 48 dead. Ten survived.
Tragedy struck again in February 2015, when TransAsia flight 235 clipped a bridge in Taipei and came down in the Keelung River, killing 43 people. That incident was captured on the dashboard camera of a passing vehicle.
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The Wall Street Journal reported:
… [S]afety concerns led to TransAsia reporting a $36.3 million loss for 2015. Those losses widened to about $70 million for the first three quarters of 2016.
Critics blasted the airline’s move, with many saying that TransAsia didn’t give passengers enough notice.
“… Kuomintang (KMT) lawmakers at the Legislative Yuan hurled criticism at the company's irresponsibility and the government's supervisory failures,” Asia One reported:
KMT lawmaker Johnny Chiang said the one-day suspension had caused great inconvenience and costs for consumers, criticising the government for failing to supervise TransAsia's business, to predict the airline's suspension and make necessary preparations.
"Was the government aware of the situation beforehand? What in the world was TransAsia doing?" Chiang asked.
Some also say that the crashes weren’t the only elements of the airline’s demise.
The Wall Street Journal reported:
… [A] weak business plan damaged the airline as much as these other mishaps, said Will Horton, senior analyst at CAPA-Center for Aviation.
TransAsia’s “strategy was shaky”, Mr. Horton said, pointing to the launch of a low-cost carrier, V Air, in 2014, despite TransAsia’s own lack of scale; and then the closure of V Air last month.
Though the move probably comes as a blow to the airline’s 1,735 employees, Taiwanese stocks were up 1.1 percent on Tuesday, Reuters reported.
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