China Airlines chairman predicts revenue growth

The revenue of China Airlines Ltd (中華航空) will likely grow 12 percent this year, as the largest Taiwanese carrier plans to add new planes and routes, its chairman said recently.

But China Airlines chairman Philip Wei (魏幸雄) wouldn't comment on the profit outlook, which is overshadowed by high crude-oil prices, he told Dow Jones Newswires in an interview.

"More capacity and higher fares will boost our revenue, but I can't estimate profit margins as oil prices are an uncertainty," Wei said.

China Airlines' revenue rose 13 percent to NT$108.69 billion (US$3.38 billion) last year from the previous year's NT$96.18 billion, but net profit plunged 85 percent to NT$645.2 million from NT$4.18 billion the year before, as global crude oil prices rose more than 40 percent.

China Airlines has taken a series of measures to cope with stubbornly high oil prices, including cutting long-haul flights, where the impact of rising fuel prices is felt the most, streamlining its fleet to reduce maintenance costs, opening new routes, and seeking cooperation with Chinese airlines, Wei said.

Wei said China Airlines is reducing flights to long-haul destinations like Rome, Houston and New York, but increasing regional flights, especially to Japan.

The company will resume flights to Osaka and add the Taipei-Sapporo route on July 1 and the Kaohsiung-Nagoya route on July 2.

China Airlines has also been streamlining its fleet, as it plans to cut the number of plane models it operates to three by next year from four now, reducing the cost of maintenance, Wei said. In 1998, the airline operated seven plane models. The carrier is also interested in the booming China market, whose air cargo sector alone is projected to grow 10 percent annually over the next 20 years.