China Airlines, EVA report losses

China Airlines Ltd (華航), the nation's largest carrier, posted an unexpected first-quarter loss, compared with a year-earlier profit, as it retired an old plane and information technology exports fell.

The airline made a loss of NT$805.8 million (US$24 million) in the three months that ended March 31, compared with a NT$385.2 million profit a year earlier, it said in a filing to the Taiwan Stock Exchange yesterday.

The carrier booked a loss of about NT$1 billion from the sale of its last Airbus SAS A300-600R passenger plane, as it retired older aircraft to cut its maintenance costs.

Smaller rival EVA Airways Corp (長榮航空) posted a loss of NT$331.3 million, or NT$0.09 a share, in the three months ended on March 31, compared with a profit of NT$225.9 million, or N$0.07, a year earlier, the company said in a filing to the Taiwan Stock Exchange yesterday.

Local airlines' profits are coming under pressure from falling information technology exports and a new high-speed railway, which has won customers on domestic routes.

"There's not much growth momentum for local carriers' sales," said Ernest Chiang, who manages about US$27 million at Industrial Bank of Taiwan Investment Trust Co (台灣工銀投信) in Taipei.

He doesn't own any China Airlines shares.

Shares of China Airlines fell 2 percent to close at NT$14.6 after the earnings announcement yesterday. The stock has fallen 4 percent this year, compared with a 0.7 percent gain in the benchmark TAIEX index.

China Airlines boosted its first-quarter sales 2.8 percent to NT$28.6 billion, according to calculations based on its monthly statements.

Sales rose 12 percent in the preceding quarter.

The company earns about 60 percent of its sales from passengers and the rest from cargo, spokesman Johnson Sun (孫鴻文) said.

Selling the last A300-600R "helped us simplify our fleet," Sun said.

Air-cargo demand in Taiwan has fallen because Quanta Computer Inc (廣達電腦) -- the world's biggest maker of notebook computers -- and other local technology companies have shifted production to China to benefit from lower wage costs.

Exports of information technology and communications products plunged 17 percent in the first quarter, the Ministry of Finance said April 9.

Taiwan High Speed Rail Corp (台灣高鐵) began operations of Jan. 5, competing with China Airlines' Mandarin Airlines (華信航空) unit and other carriers.

More than 2 million passengers used the train service in its first two months of operations, company spokeswoman Jennifer Chen said on March 14.

Train tickets for the trip between Taipei and Kaohsiung cost about 30 percent less than airlines' fares.