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Air Macau is facing the biggest financial crisis in its 14-year history, with soaring fuel prices threatening to push the carrier into bankruptcy.
Shareholders including Air China and Stanley Ho Hung-sun's Sociedade de Turismo e Diversoes de Macau (STDM) will meet  this month to decide the  fate of the  city's largest carrier. That could include winding up the airline or a fresh capital injection.
Air Macau yesterday said  Air China and the Civil Aviation Administration of China had  committed their support, ensuring the company would be sustained through the critical period. Its pilots had also expressed support.
Soaring jet fuel prices have  taken a heavy toll on the region's aviation industry this year, with  Oasis Hong Kong Airlines going into liquidation in April.
According to a source close to Air China, which owns 51 per cent of Air Macau, letters have been sent to shareholders calling for a meeting to resolve the heavy losses being suffered by the carrier.
Air Macau said 'some major strategic moves will be announced very shortly'.
It is expected that Air China may buy out  shareholders reluctant to commit further funds to the cash-draining carrier.
SEAP, an investment fund of Portuguese airline TAP, owns 20 per cent and STDM owns 14 per cent. Evergreen Airways Service (Macau), the Macau government and several others investors share the balance.
The carrier had lost up to 100 million patacas in the past two months and more than 100 million patacas during the first quarter of this year, equal to the capital of the company, the Macau Daily reported.
The capital  has been halved to 200 million patacas because of  losses incurred in the past few years.
Air Macau is expected to take  a hit from  cross-strait passenger flights, with 80 per cent of its Taiwan transit passengers  expected to travel  directly to the mainland under the new links. That would translate into a 60 per cent drop in passengers.
The company yesterday blamed  high fuel costs  for its predicament. However, one industry veteran said the carrier's poor performance was due to its management and conservative expansion plan.
'The routes that Air Macau is serving are supposed to be lucrative as it dominates the gateway between Macau and the mainland,' said one transport analyst.
Air Macau serves  20 destinations including Taipei, Kaohsiung, Bangkok, Manila, Osaka, Seoul and  13 mainland  cities including Beijing, Shanghai, Kunming and Xiamen. The carrier  has not allowed its smaller competitor Viva Macau to operate any routes into the mainland, even though some of the routes are not covered by Air Macau.
'It is not possible for Air Macau to go into bankruptcy,' said RCM transport analyst Karen Chan. 'It is a matter of reputation and face for Air China to be present in Macau and Macau needs a home carrier as long as it  has an airport.'
Burn rate
The carrier has lost up  to 100 million patacas  in the past two months
The proportion of its passengers  Air Macau could lose because of the launch of direct cross-strait flights: 60%
Turbulent times
Air Macau
September 13, 1994 Established
November 9, 1995  Takes delivery of first plane, an Airbus 321
December 8, 1995  First commercial flight from Macau's new US$9 billion airport to Taipei
Routes (20 destinations)
13 mainland (including Beijing, Shanghai and Shenzhen), plus Taipei, Kaohsiung, Osaka, Manila, Seoul, Pusan and Bangkok
Fleet (19 planes)
7 Airbus 321
5 Airbus 319
1 Airbus 320
1 Airbus A300-600R
5 Airbus freighters



High fuel costs threaten to ground Air Macau