Source: Macau Daily Times Author: 08/01/2008
Subject Concerned: Government Airlines
Air Macau's shareholders meeting scheduled for July 31 was postponed for a new date, not yet settled.
The Macau Daily Times understands that Air China managers are in Macau and met, during the past few days, Air Macau's administration to deal with the difficult economic situation our flagship company is living in.
Several sources contacted by Macau Daily Times confirmed that no information about these meetings has been released to shareholders.
Despite information released by the company and anonymous sources saying they were sure that Air China - Air Macau's main shareholder - was intending to input money to cover the huge hole the airline got into in 2008's first half, aviation sources pointed out that the solution was not that simple.
Two weeks ago, Air China (CA) board secretary Huang Bin acknowledged "Air Macau's request for help" but didn't promise any immediate input of capital.
Huang said that "CA will determine a solution with other NX [Air Macau] stakeholders, including TAP Portugal's SEAP investment fund (15 percent), casino company Sociedade de Turismo e Diversoes de Macau (14 percent), the Macau SAR Government and EVA Air." CA holds a 51 percent stake.
For Air China to input MOP400 million to cover the hole not allowed by Macau law its not a problem. The real problem is, our sources say, for how long the problem will be solved. Indeed, the major concern is for how long the amount will be enough - or when money will be needed again if losses continue at the same pace.
As the Macau Daily Times reported, the chairman of the board of directors of Air Macau, Zhao Xiaohang, sent out a letter to the company's shareholders announcing that "since April 30, 2008, the net worth of the company had fallen below half of the value of the company's capital," leaving the company in the situation described in article 206 of the Macau Commercial Code.
According to the article, if a company loses up to half of its capital, the body must propose that the company be dissolved or the capital reduced - unless shareholders pay amounts in money that replenish the assets to a measure equal to the value of the company capital.
The airline has lost up to MOP100 million in the months of May and June alone, and another MOP100 million in the first quarter of this year, totalling half of the company's capital.