Sat, Feb 11, 2006 - Page 10 News List

China Airlines upgrades its freight fleet

By Denise Kee  /  BLOOMBERG

China Airlines (華航), Taiwan's largest carrier, recently obtained a NT$5 billion loan (US$154 million) to buy a Boeing 747 cargo plane in response to increases in its freight business.

International Commercial Bank of China Co (中國國際商銀), Taipei Fubon Bank (台北富邦銀行) and Far Eastern International Bank (遠東國際商銀) arranged the 12-year loan.

Lenders offered to provide a total NT$7.2 billion, said a banker involved in the deal, who declined to be identified.

China Airlines is renewing its fleet of cargo planes as Taiwan and China ease air transportation restrictions between the countries. Airlines based in Taiwan are barred from flying scheduled passengers or cargo services directly to Chinese cities, preventing them from tapping China's export boom.

"When the cross-strait restrictions are lifted, China Airlines will be able to capture a larger market share of the cargo business in China, which is now mainly taken up by international freight companies like UPS and FedEx," said Marc Wang, an analyst at KGI Securities Co (中信證券) in Taipei.

"About 40 percent of the cargo China Airlines transports comes from China via Hong Kong and Macau," he added.

China Airlines got about 48 percent of its NT$108 billion revenue last year from freight, a part of its business that will probably grow by 10 percent to 15 percent this year, Wang said.

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