Air Macau is facing bankruptcy without fresh capital injection according to a report in the South China Morning Post.
The newspaper says the 14 year old old carrier is facing its biggest financial crisis on the back of soaring fuel costs.
Air Macau's largest shareholders are Air China, (51%), an investment fund of Portuguese airline TAP, (20%) and interests of casino magnate Stanley Ho Hung-sun (14%). The balance of shares are split between a variety of organisations including the Macau SAR government.
The South China Morning Post says shareholders have been called to a meeting later this month to discuss options for the airline's future.
"Air Macau said yesterday Air China and the Civil Aviation Administration of China had committed their support, ensuring the company would be sustained through the critical period," the newspaper reported. "Its pilots had also expressed support."
The carrier has been aggregating significant losses - estimated at US$13 million in the last two months, and the same amount in the first quarter of this year - about the equivalent of its capital.
Air Macau flies from Macau to 20 destinations including Taipei, Bangkok, Manila, Osaka, Seoul, Beijing, Shanghai and Kunming. But it has been facing increased competition from low-cost start-up Viva Macau and from other regional carriers, such as Bangkok Air which has just commenced flights to Bangkok. It is also facing a substantial loss of business as a transit point between Chinese cities and Taipei now that the Chinese government has allowed direct flights to Taiwan and the mainland.
One analyst told the South China Morning Post there was no chance of Air Macau going into bankruptcy.
"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," said Karen Chan, RCM transport analyst.