November 21, 2016 / 12:57 PM / 4 years ago

CORRECTED-UPDATE 2-TransAsia Airways seeks flight suspension, shares halted

(Corrects date of TransAsia’s 2014 crash in paragraph 11 to July, from June)

* TransAsia unexpectedly seeks flight suspension

* TransAsia to hold unscheduled board meeting on Tuesday

* Taiwan government says to launch share probe

* TransAsia shares suspended pending announcement

By Faith Hung

TAIPEI, Nov 21 (Reuters) - Taiwan’s third-largest airline, TransAsia Airways Corp., has applied to suspend flights on Tuesday, while the stock exchange has halted trading in its shares pending an announcement from the company.

The flight suspension came as a shock to the island’s airlines, tourism industries and the government.

“They informed us suddenly they will suspend flights tomorrow,” Fang Chih-wen, deputy director general of the Civil Aeronautics Administration, told Reuters by telephone on Monday. “We will continue to watch further developments.”

TransAsia said in a statement it would be holding an unscheduled board meeting on Tuesday. Officials at the company could not be reached for immediate comment.

“There is still an important announcement to be made by the company,” the Taiwan Stock Exchange said. The stock exchange said TransAsia could apply for its shares to resume trading after the announcement.

TransAsia shares closed 7 percent lower and at multi-year lows on Monday. Trading volume surged to more than 10 million shares from 398,000 shares on Friday.

“It is obvious TransAsia stocks were involved with insider trading,” the government said in a statement. “The Financial Supervisory Commission is working with the Minister of Justice to launch an investigation.”

The airline issued an apology to customers for the flight suspension and said it would fully compensate them for any losses.

TransAsia has reported losses in each of the previous six quarters up to the end of September.

Early this year, Taiwan’s aviation safety agency urged TransAsia to review its safety protocols, pilot training programme and hiring practices so as to cut “imminent risks”.

Those recommendations were among 10 made by the Aviation Safety Council (ASC) following its investigation into a July 2014 crash of TransAsia’s flight GE222 which killed 48 of the 58 passengers and crew.

Less than a year later, another flight crashed into a river shortly after taking off from Taipei’s Songshan airport. (Reporting by Faith Hung; editing by David Clarke and Jane Merriman)

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