The crisis is deepening at China Airlines following Saturday's tragic crash, killing all 225 people on board.

Lawmakers have called for the airline to be privatised, angry at the carrier's poor safety record which has caused four fatal crashes since 1994 and the death of more than 600 people.

The carrier's credit rating has been slashed and it has cut its own earnings forecast by 12%.

It has also been forced to suspend 12 cargo flights after the government grounded its four remaining Boeing 747-200 jets for a special inspection.

Local banks should not drop stones on a person who has already fallen into a well

Taiwan finance minister

Its shares sank by the daily 7% limit for the second day running, almost as soon as the opening bell was sounded.

And the Taiwanese finance minister has urged banks not to desert the troubled firm.

"Local banks should not drop stones on a person who has already fallen into a well," said Taiwan's finance minister Lee Yung-san, urging them to keep credit lines open.

Cancellations

The Taiwanese rating agency expressed concerns over passenger defections and rising insurance costs as it downgraded the airline.

And there is already evidence that China Airlines is experiencing customer cancellations.

This accident will affect ticket prices and load factors for four months

James Chang China Airlines

"Clients with booked flights for June are cancelling reservations, especially to Hong Kong," said Johnson Tseng, chairman of the Taipei Association of Travel Agents.

"This accident will affect ticket prices and load factors for four months, but cargo revenues will continue to increase," said China Airlines vice president James Chang.

The rating agency also expects annual insurance expenses to rise by 40% from the $50m the airline currently pays.

In addition, the government has indicated that it would consider insuring the airline if private insurers were unwilling.

Poor safety

China Airlines has one of the worst safety records in the world.

The government is set to present a package on improving flight safety in the next two weeks.

There have also been calls for the government to replace senior management at the airline.

There was a management reshuffle on Tuesday, but the airline said it was not connected with the tragedy.

No survivors are expected from the crash which is the fourth fatal accident since 1994.

The crash comes just as the airline was forging a recovery following the post-11 September slump in air travel.

China Airlines is Taiwan's biggest carrier, and had enjoyed a healthy rise in revenues during the first three months of the year.