Tue, Jun 10, 2008 page12

• Soaring fuel costs force CAL, EVA to cut flight schedules

  FEWER CHOICES China Airlines is cutting 50 all-cargo and 100 passenger flights while EVA will cut services to Amsterdam, LA and Ho Chi Minh City

  • By Yu-Huay Sun / BLOOMBERG
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  China Airlines (中華航空) and EVA Airways Corp (長榮航空) will cut as much as 10 percent of flights as they struggle to cope with jet-fuel prices that have doubled in a year.

  China Airlines is axing 100 passenger flights a month, mainly to the US and Asia, spokesman Bruce Chen (陳鵬宇) said by telephone yesterday. EVA Air will cancel about 5 percent of its passenger services from Sept. 1 to Dec. 1, spokeswoman Katherine Ko (柯文玲) said.

  The airlines follow Qantas Airways Ltd, China Southern Airlines Co (中國南方航空) and other Asia-Pacific carriers in announcing cuts after surcharges failed to offset surging jet-fuel costs. Higher ticket prices have also helped damp travel demand, with Taiwanese making 0.8 percent fewer flights overseas in the first quarter than a year earlier.

  The carriers “lose money from every flight they make,” said Bruce Tsao, an analyst at Capital Securities Corp (群益證券) in Taipei. “They don’t have any choice” except making cuts.

  He rates both China Airlines and EVA Air as “hold.”

  China Airlines fell 5.4 percent to NT$14.85 at 12:43pm in Taipei trading, compared with a 1.8 percent decline in TAIEX. EVA Airways declined 4.4 percent to NT$16.35.

  China Airlines will axe 50 all-cargo flights a month as well as making cuts in areas including marketing, Chen said. The carrier presently has no plans to reduce salaries or to trim flights to Europe, where earnings are better, he said.

  “We’re hoping to control our losses,” Chen said.

  The reduced number of flights “will continue until the company turns a profit or oil costs become relatively favorable,” he said.

  China Airlines’ loss widened to NT$2.97 billion (US$98 million) in the first quarter, from NT$806 million a year earlier.

  EVA Air’s loss was NT$2.29 billion, compared with NT$331 million a year earlier.

  EVA Air will cut services to Amsterdam, Los Angeles and Ho Chi Minh City, Ko said. The airline has yet to decide whether the flights will resume after Dec. 1, she said.

  Taiwanese carriers have raised surcharges on international routes three times this year. Far Eastern Air Transport Corp (遠東航空) halted flights last month due to a lack of funds.

  At least seven major Asia-Pacific airlines have announced plans to cut flights in the past two weeks, because of surging fuel costs. Qantas and Air New Zealand Ltd said last week they will trim international services. China Southern, China’s biggest airline, is planning similar moves.

  Airlines across the region dropped after the price of oil jumped the most ever in dollar terms on Friday, climbing 8.4 percent to US$138.54 a barrel.

  Carriers worldwide may report a combined loss of as much as US$6.1 billion this year, the worst since 2003, the International Air Transport Association said.
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