Viva Macau plans legal action

PUBLISHED : Saturday, 03 April, 2010, 12:00am
UPDATED : Saturday, 03 April, 2010, 12:00am

Grounded budget airline Viva Macau is planning legal action against the Macau government for killing it off just a day before it closed a US$30 million deal with a foreign investor that it says could have rescued it.

Founder and president Ngan In-leng said lawyers were still working on the amount to be claimed. He said it would include not just the 600 million patacas the airline's shareholders injected into it last year but also loss of income and compensation for damage to the firm's good name.

Ngan said he had not given up hope of getting back the licence, but after the Civil Aviation Authority began deregistering Viva Macau's aircraft on Wednesday, the prospect of it flying again was not bright. Hopes were further dashed after Ngan - a powerful businessman and family friend of former Macau chief executive Edmond Ho Hau-wah - failed to get a meeting with authority president Simon Chan Weng-hong.

The authority said last night it had no choice but to ask flag carrier Air Macau to terminate its sub-concession contract with Viva and deregister the airline to protect the public interest and uphold the city's image as a tourist destination. It reiterated that its action complied with the law.

But Ngan said yesterday the government was well aware that the company was on its way to getting a white knight. 'We were supposed to sign the third contract with a foreign investor on Monday, and in three weeks we would have had 156 aircraft and US$30 million of capital coming,' he said. 'The government knew it, and yet it killed us on Sunday.'

Ngan refused to speculate on the reason but said Viva Macau's sub-concession contract with Air Macau was a bilateral commercial agreement that neither Air Macau nor the government could terminate unilaterally. He further challenged the decision's legality, saying Air Macau changed the reason for revocation from 'a government order' in a letter dated March 28 to 'flight cancellations and failing to assist' three days later when challenged.

But legal action could take years, and the airline is building up debt by the minute with staff payments and other expenses and no cash flow.

As passengers awaiting repayment for cancelled flights started to panic, Viva Macau chief executive Reg Macdonald said the firm would strive to ensure refunds were handled properly. It has promised refunds within two weeks to 4,739 passengers whose flights were cancelled between Sunday and Thursday.