EVA Airways Corp (長榮航空), the nation’s second-biggest airline, yesterday announced a plan to reduce its capital by 42.6 percent to improve its financial health.
The company said in a statement it would reduce capital by NT$16.8 billion (US$510 million) after posting NT$1.68 billion net losses in the first half to falling demand and rising fuel costs, or a decline of NT$0.43 earnings per share.
The airline will seek a capital injection of NT$7 billion in cash through a public offering of NT$10.6 per share to produce a more concrete capital structure, the company said.
Altogether, the adjustment will trim its capital by NT$9.8 billion to NT$29.3 billion, from the current NT$39.43 billion, the company said.
The company said the data would improve this quarter and for the rest of the year following the launch of regular cross-strait flights yesterday.
The airline reported NT$5.99 billion in revenue in July, up 12.89 percent from June. EVA shares dropped 2.95 percent, or NT$0.23, to NT$7.56 at close of trade yesterday. Trading will stop during the capital restructure between today and Sept. 17, the company’s filing to the stock exchange said. Winson Wang (王榮旭), an analyst at Marbo Securities Consultant Co (萬寶證券投顧), said it would be difficult for the airline to make profits this year in light of mounting fuel costs and falling numbers of tourists from abroad.
“Rising fuel costs will more than offset the pickup in flights across the Taiwan Strait,” Wang said, adding that the number of Chinese tourists would drop in the second half following Typhoon Morakot, which devastated Alishan and other popular tourist attractions in southern Taiwan.
RSS