Sat, Jun 12, 2004 - Page 10 News List

China Airlines says 2004 profit may exceed its forecast


China Airlines Ltd (CAL, 華航) said profit this year may exceed its December forecast of NT$3.04 billion (US$91 million) on a recovery in passenger and cargo transport demand.

"We're confident of meeting our forecast, and may even exceed that figure," airline president Philip Wei (魏幸雄) said in an interview in Taipei after the company's annual shareholders meeting, without giving specific figures.

"The business pick-up pace will be more than the increase in operating costs," Wei said.

The recovery in demand this year is expected to more than offset increased fuel costs, Wei said.

CAL's profit last year slid 42 percent to NT$1.78 billion from NT$3.12 billion in 2002 as the SARS epidemic damped demand for passenger travel in Asia.

Shareholders approve dividend

The airline said that its shareholders meeting approved yesterday resolutions to pay a dividend of NT$0.6 per share (NT$0.1 in cash and NT$0.5 in shares).

The airline earlier forecast NT$89.07 billion (US$) in revenue and NT$1 in earings per share for this year.

CAL shares rose 0.5 percent to close at NT$19.10, reversing earlier losses of as much as 3.7 percent.

The stock rose 30 percent this year, compared with a 2.6 percent decline in the TAIEX.

"China Airlines has done very well in hedging risks of recent oil price surges in its financial operations," said Tu Jin-lung (杜金龍), president of Grand Cathay Investment Services Co (大華投信).

"We estimate China Airlines can make a net profit of NT$4 billion this year," Tu said.

Fuel costs

accounted for

Crude oil for delivery next month rose US$0.91, or 2.4 percent, to settle at US$38.45 a barrel on the New York Mercantile Exchange on Thursday.

The contract rose to US$42.33 a barrel on June 1, the highest settlement since trading began in 1983. Prices were 21 percent higher than at this time last year.

China Airlines in March said it fixed 70 percent of its fuel costs for this year to hedge against increased prices.

Last year, it hedged about 60 percent of its fuel needs. Fuel costs make up about a quarter of the airline's total costs.

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