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China Airlines to post loss for first half of the year

China Airlines Co (華航) said it will post a net loss for the first half and a profit for the full year as more people travel and shipments pick up after Asia curbed the SARS epidemic.

"We are quite optimistic about making a profit this year," spokesman Roger Han (韓梁中) said at a Taipei Foreign Correspondents' Club meeting.

"We have very strong cargo operations and strong outbound traffic," Han said, without providing specific figures.

The outbreak of SARS led to a slump in travel demand in the second quarter, hurting one of China Airlines' most profitable routes -- the one between Taiwan and Hong Kong -- and prompting Asian airlines to cut more than 1,150 weekly flights.

Cargo, which usually makes up about half of the carrier's total revenue, accounted for about 60 percent of total revenue in May when the passenger travel slump was at its worst, Han said.

The company isn't considering "drastic" cost-cutting measures, he said.

The carrier, which ordered 22 aircraft last December, said the delivery schedule was on track and it would buy as many as 70 engines, including spares. Each engine typically costs between US$2.5 million and US$4.5 million.

Chairman Lee Yun-ling (李雲寧) said the carrier will select engines for 18 of the aircraft in two to three weeks. The bidders are Pratt & Whitney, General Electric Co and Rolls-Royce Group Plc.

The company earlier reported first-quarter net income of NT$456.9 million (US$13.3 million), without providing a year-earlier comparison. In the first half of last year, it earned NT$1.3 billion and NT$3.1 billion for all of last year.
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