EVA Airways to post loss

EVA Airways Corp (長榮航空), Taiwan's No. 2 air carrier, had an operating loss in the second quarter as the slowing domestic economy sapped air-cargo demand, said a senior executive, who asked not to be identified.

EVA Air, which doesn't report quarterly figures, had an operating profit of NT$1.99 billion (US$57.5 million) in the first half of 2000. The company will release first-half 2001 earnings today and the executive wouldn't comment further on those figures. EVA Air spokesman Nieh Kuo-wei (聶國偉) declined to comment.

EVA Air suffered a drop in its airfreight business as Taiwan's economy, which depends on exports of electronics products, shrank in the second quarter. In July, the company lowered its estimate for 2001 pre-tax profit for a second time this year, to NT$1.4 billion, citing falling cargo sales.

``EVA has the highest exposure to cargo shipments of any other major Asian airline with both passenger and cargo businesses, so a slowing economy will affect EVA more than others,'' said Timothy Ross, an analyst at UBS Warburg.

The Evergreen Group's (長榮集團) airline arm last month said cargo sales in the first five months of the year fell 8.6 percent from the same period last year. In the same period, it filled 68 percent of its cargo holds, down from 80 percent in the year-earlier period.

Estimates range widely for first-half earnings.

UBS's Ross expects profit to fall from a year ago to NT$232 million, ABN Amro expects a 40 percent drop to NT$793 million and Credit Suisse First Boston expects loss of NT$1.3 billion.

Taiwan's economy shrank 2.4 percent in the second quarter from a year ago as exports of computers, mobile phones and semiconductors fell. Second-quarter growth in the US, Taiwan's biggest market, was the slowest in more than eight years.

Overseas orders for Taiwan-made electronics and other goods fell 17 percent in July from a year earlier after dropping 20 percent in June, according to the Ministry of Economic Affairs.

The carrier's shares have gained 25 percent this month on hopes Taiwan will soon relax its restrictions on trade, transportation and investments with China. That will allow Taiwan investors to tap China's economy, which grew 7.8 percent in the second quarter, without wasting time and money passing through Hong Kong or a third country.

A panel of corporate chieftains, academics and politicians on Sunday recommended that President Chen Shui-bian (陳水扁) resume direct cross-strait transportation links under the WTO guidelines.