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EVA posts wider first half loss on slump in air cargo

EVA Airways Corp (長榮航空), the nation's second-largest carrier, posted a wider first half loss because of a slump in demand for air cargo.

The net loss was NT$1.37 billion (US$41 million) in the three months ended June 30, compared with NT$1.07 billion a year earlier. That was worse than the NT$850 million loss median estimate in a survey of four analysts.

The second quarter loss was derived by subtracting first quarter results from first half figures released by the company yesterday.

Air cargo has fallen as lower wages entice manufacturers to shift production of computers, mobile phones and other goods to China. EVA Air and larger rival China Airlines Ltd (中華航空), which are both barred from flying regularly to China, rely on air-freight for more than 40 percent of sales.

"They're in a bad condition regarding the cargo business," said Peter Tzeng (曾耀德), a Taipei-based analyst at Polaris Securities Co (寶來證券), which has an "equalweight" rating on the stock, before the earnings announcement.

The nation's airports handled 7.2 percent less cargo in the first half.

EVA Airways' second quarter sales fell 2.1 percent from a year earlier to NT$22 billion, after a 0.7 percent drop in the previous three months. The derived second quarter loss was confirmed by Katherine Ko (柯文玲), a spokeswoman for the carrier.

The airline's shares climbed 0.4 percent to NT$12.60 in Taipei before the earnings announcement. The stock has fallen 7 percent this year, compared with a 12 percent gain in the benchmark TAIEX.
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