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TransAsia Airways poised to receive NT$600 million in state compensation

TAIPEI, Taiwan -- TransAsia Airways (復興航空) is poised to receive NT$600 million in state compensation, after the R.O.C. Air Force elected to cease appeal efforts in courts following a decade-long legal battle.

Reports indicate that the NT$600 million windfall is expected to contribute earnings of NT$1.19 per share to the airline company, based on its estimated capitalization of NT$5.029 billion.

The airline yesterday confirmed reports of the forthcoming state compensation, but did not supply a specific timetable, though it stated that the cash is expected to appear in the company's books in 2014.

According to institutional investors, with operating results seeing improvements in the fourth quarter, the struggling airline company may be able to rebound from the red this year if a portion of the forthcoming state compensation is paid out before the end of the current fiscal year. As of the end of the third quarter, the company had accumulated losses of NT$82.63 million, or minus NT$0.15 per share.

The decade-long legal battle dates back to March, 2003, when TransAsia Airway's flight GE543 collided with a ground vehicle on the runway of Tainan Airport after it was instructed to proceed with landing by air traffic control. Following the incident, AIRBUS, the aircraft's France-based manufacturer, deemed the damages suffered during the collision to be beyond repair. As a result, the airline had to scuttle the aircraft, incurring tremendous losses.

Investigations by the Control Yuan and the Public Functionary Disciplinary Sanction Commission (公務員懲戒委員會) found that the Air Force's 443rd Tactical Fighter Wing (443聯隊), which was based at Tainan Airport, was largely responsible for the accident, as it did not clear the runways before instructing flight GE543 to land. Air Force Command Headquarters, Ministry of Defense (國防部空軍司令部), however, had contested the case in court, resulting in a decade-long legal battle with the airline company.

Reports indicate that the airline is poised to receive state compensation of NT$537 million, of which a NT$265 million portion is eligible for interest payments, resulting in a total compensation sum nearing NT$600 million. The airline has since consented to have interest payments of the compensation amount calculated at 4 percent.

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