EVA Airways Corp (長榮航空) said yesterday that it had profited in the first quarter after five previous quarterly losses, with the carrier reporting NT$199.6 million (US$5.92 million) in net profit, or NT$0.05 in earnings per share, in the three months ending March 31.
The nation’s second-largest airline attributed first-quarter profits to “increasing cross-strait flights and falling fuel costs,” it said in a statement.
The first-quarter profit compares with a net loss of NT$2.29 billion or NT$0.59 per share during the same period last year. The last time EVA saw a quarterly profit was in the third quarter of 2007, when it posted NT$792 million.
First-quarter revenue, meanwhile, dropped 29.8 percent to NT$16.72 billion from NT$23.83 billion a year earlier and fell 18.6 percent from NT$20.55 billion in the previous quarter, reflecting the impact of the global financial crisis on EVA’s passenger and cargo businesses.
But the company is upbeat about its operation this year, despite a traditionally slow season in the second quarter, the statement said.
“The high season will arrive in the third quarter for passenger business and in the fourth quarter for cargo business,” EVA said. “The number of cargo flights is expected to expand following upcoming negotiatons from the two sides [this weekend].”
EVA’s board yesterday also approved a recapitalization proposal in a bid to strengthen the company’s financial structure and boost its net value per share.
It also will not distribute dividends to shareholders this year because of its poor performance last year.
Its board of directors will receive no compensation or bonuses because the company has no retained earnings for such payouts, EVA said in a stock exchange filing yesterday. Last year, EVA saw its loss expand nine times to NT$16.9 billion from NT$1.87 billion in 2007.
The company’s recapitalization plan will be implemented in two stages, with EVA first cutting its capital by NT$16.8 billion by buying back and canceling 1.68 billion common shares.
Following the 42.6 percent reduction in its capital, EVA said it will have capitalization of NT$22.63 billion and its net value per share will climb to more than NT$10, from NT$6.9 at the end of the first quarter, it said in the statement.
EVA’s capital reduction plan came after larger rival China Airlines Ltd (CAL, 中華航空) announced on April 3 plans to cut NT$14.9 billion or 30.67 percent in the company’s capital to improve financial strength, after it reported a record net loss of NT$32.35 billion, or NT$7.11 per share, last year.
Following the completion of capital reduction, EVA said it planned to raise NT$7 billion by issuing 70 million new shares on the open market, which is expected to increase the company’s capital to NT$29.6 billion. The company said it planned to use the proceeds to purchase new airplane equipment and repay loans.
EVA did not specify the pricing of its new shares, however. Shares of EVA remained unchanged at NT$9.9 yesterday. The stock has risen 32 percent so far this year, outperforming an increase of 28.1 percent on the benchmark TAIEX over the same period.
The company will seek shareholder approval for the recapitalization proposals at an annual general meeting on June 16, it said in a separate filing.