Shares of China Airlines (中華航空) and EVA Airways (長榮航空) rallied in yesterday morning‘s trade on increased optimism toward their earnings outlook after direct flights between Taipei International Airport (Songshan) and Tokyo International Airport (Haneda) resumed a day earlier following a 31-year hiatus, dealers said.
China Airlines rose 4.61 percent to NT$24.95, while EVA Air gained 6.47 percent to NT$32.90.
China Airlines and EVA Air will provide 14 Taipei-Tokyo return flights each week.
According to Hua Nan Securities (華南永昌投顧), the resumption of direct flights between the two airports is expected to boost the number of Japanese tourists visiting Taiwan by about 10 percent a year.
BENEFICIARIES
“Without doubt, China Airlines and EVA Air are the two direct beneficiaries of the flight resumption,” Hua Nan analyst Henry Miao (苗台生) said.
“The strong buying seen this morning reflects investors’ upbeat mood about the two carriers,” Miao said.
Hua Nan Securities said the new route’s contribution to the two carriers’ sales would become clearer next year, as the contribution to this year’s revenues would be minimal because there are only two months remaining.
Taking the Taipei-Tokyo flights into account, Hua Nan Securities said China Airlines was expected to post earnings per share of NT$2.79 this year and NT$3.07 next year. This compares with a loss per share of NT$0.83 last year, when the global economic meltdown hit the airline business.
Hua Nan Securities forecast EVA would register earnings per share of NT$4.84 for this year and NT$5.08 next year, compared with a loss of NT$0.96 last year.
CONVENIENCE
China Airlines said on Sunday the Taipei-Tokyo flights were expected to have an average capacity of 80 percent because of the increased convenience it offers travelers.
Landing at Haneda rather than at Narita International Airport — the usual destination for international flights, which is farther from Tokyo — can save travelers at least 30 minutes on the commute into Japan’s capital.
Hua Nan Securities had a target price of NT$28 for China Airlines and NT$38 for EVA Air.
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