If Shanghai Airlines were to buy grounded Taiwanese carrier Far Eastern Air Transport (FAT) it could be a good business opportunity assuming it could be bought at the right price and Shanghai Airlines gained effective control over the company.
FAT shuttered its operations on 13 May because it ran out of cash and is heavily in debt.
The owners have been trying unsuccessfully to bring in a new investor that is willing to inject cash into the business and help it overcome its debt problems.
Low-cost carriers such as AirAsia and Jetstar Asia have looked at the business but appear to have decided against getting involved.
AirAsia's director and co-founder Conor McCarthy told me a few weeks ago that AirAsia buying into FAT was unlikely because there are too few synergies between the FAT and AirAsia businesses. FAT is a full-service carrier that operates Boeing MD-80s and Boeing 757s and AirAsia is a low-cost carrier that operates Airbus A320s.
While there may be few synergies between FAT and AirAsia, there are some compelling synergies between FAT and Shanghai Airlines.
Both operate 757s and both have traffic rights to operate between China and Taiwan.
If Shanghai Airlines were to team up with FAT then Shanghai Airlines would immediately become the largest player operating over the Taiwan Strait.
Shanghai Airlines would also gain FAT's pilots which is significant because there is a shortage of commercial pilots in China. The Taiwanese pilots would adapt well to working for Shanghai Airlines because, after all, they speak Chinese.
Also FAT's maintenance arm does heavy maintenance checks on 757 and MD-80 series aircraft so this maintenance base could maintain Shanghai Airlines 757s and do maintenance work for third party customers.
All this adds up to a compelling case for why it might be worthwhile for Shanghai Airlines to take a close look at FAT.
FAT shuttered its operations on 13 May because it ran out of cash and is heavily in debt.
The owners have been trying unsuccessfully to bring in a new investor that is willing to inject cash into the business and help it overcome its debt problems.
Low-cost carriers such as AirAsia and Jetstar Asia have looked at the business but appear to have decided against getting involved.
AirAsia's director and co-founder Conor McCarthy told me a few weeks ago that AirAsia buying into FAT was unlikely because there are too few synergies between the FAT and AirAsia businesses. FAT is a full-service carrier that operates Boeing MD-80s and Boeing 757s and AirAsia is a low-cost carrier that operates Airbus A320s.
While there may be few synergies between FAT and AirAsia, there are some compelling synergies between FAT and Shanghai Airlines.
Both operate 757s and both have traffic rights to operate between China and Taiwan.
If Shanghai Airlines were to team up with FAT then Shanghai Airlines would immediately become the largest player operating over the Taiwan Strait.
Shanghai Airlines would also gain FAT's pilots which is significant because there is a shortage of commercial pilots in China. The Taiwanese pilots would adapt well to working for Shanghai Airlines because, after all, they speak Chinese.
Also FAT's maintenance arm does heavy maintenance checks on 757 and MD-80 series aircraft so this maintenance base could maintain Shanghai Airlines 757s and do maintenance work for third party customers.
All this adds up to a compelling case for why it might be worthwhile for Shanghai Airlines to take a close look at FAT.
