By 1950, following the defeat of Chiang's forces and their retreat to Taiwan, the airline was facing financial difficulties. The CIA formed a private Delaware corporation called Airdale Corporation, which formed a subsidiary called CAT, Inc. The subsidiary corporation purchased nominal shares of the Civil Air Transport. CAT maintained a civilian appearance by flying scheduled passenger flights while simultaneously using other aircraft in its fleet to fly covert missions.
With the spread of communism throughout Southeast Asia, CAT’s mission changed.
At the time, the families of the pilots were told that they crashed into the Sea of Japan on a routine flight to Tokyo, in order to keep the CIA's covert actions in China secret. In 2001, China allowed the US Defence Department's Prisoner of War and Missing in Action (POW/MIA) office to conduct a recovery effort for the bodies of the pilots. In 2005, the POW/MIA office announced that it had identified the remains of Robert Snoddy using DNA analysis. Schwartz's remains have not been successfully recovered.
The 1952-1953 edition of Jane's All The World's Aircraft lists the head office address as Suite 309, Kass Building, 711 14th Street, N.W., Washington, D.C., with the footnote that the company had reregistered in the U.S. The president is given as Whiting Willauer, and the fleet, which consisted of 23 Curtiss C-46 Commando and 4 Douglas DC-3 aircraft.
CAT transported supplies and troops for French operations during the First Indochina War as early as Operation Castor in November 1953.
CAT assisted the French government at various times during its Indochina wars, flying supplies and equipment into Hanoi's Gialam airport and other fields using C-46 and C-47 transport planes.
At the Battle of Dien Bien Phu, CAT supplied the French garrison by parachuting troops and supplies with covert USAF C-119 inscribed with French Air Force insignia. In February 2005, seven surviving CAT pilots out of the thirty-seven involved in the battle received the honorific title of Legion of Honor during a special ceremony at the French Embassy in Washington.
Two CAT pilots were killed in action during the siege of Dien Bien Phu in May 1954. They were the very first American casualties of the upcoming Vietnam War.
The 1956-1957 edition of Jane's All The World's Aircraft lists the head office address as 46 Chung Shan Road, North, 2nd Section, Taipei, Taiwan (Formosa). The president and general manager is given as Hugh L. Grundy, with C.J. Rosbert listed as vice-president and assistant general manager. The fleet is listed as 2 Douglas DC-4, 22 Curtiss Commando, 2 Douglas DC-3, 3 Douglas C-47, and 2 Convair Catalina.
In the 1958-1959 edition of Jane's, the last year in which the "Airlines of the World" section was carried, the home office address in Taiwan remained the same, but no company officers are listed. The fleet is given as 3 Douglas DC-4, 25 Curtiss C-46, 5 Douglas DC-3, 2 Convair Catalina, with 2 Douglas DC-6B on order.