Mon, Mar 14, 2011 - Page 12 News List

China Airlines may seek out investors: chairman

Bloomberg

China Airlines Ltd (CAL, 中華航空), Taiwan’s largest carrier, may seek strategic investors to help finance a planned 25 percent fleet expansion as economic growth and improved relations with China spur demand.

The airline will look for partners to help improve operations and management, CAL chairman Chang Chia-juch (張家祝), 60, said on Thursday in an interview at the airline’s headquarters in Taoyuan. He declined to say which companies the firm would seek tie-ups with or how big a stake it may sell.

The government-backed carrier is considering adding investors that can bring “strategic value,” Chang said.

In 1999, the company neared an agreement to sell as much as 25 percent to Singapore Airlines Ltd. The deal collapsed amid opposition from China Development Industrial Bank (中華開發工銀), a CAL shareholder. Singapore -Airlines is not currently considering a tie-up, spokesman Nicholas Ionides said.

CAL may also offer more shares on the stock market as it increases its group fleet from 80 to 100 aircraft, Chang said. The airline is expanding as improved relations spur trips across the Taiwan Strait and as eased visa rules enable more Taiwanese to travel in Asia and to Europe.

“They should be looking at Asia carriers, as growth in passenger and cargo markets in this region is relatively fast,” said Peter Tzeng (曾耀德), a Taipei-based analyst at Polaris Securities Co (寶來證券), who has an “overweight” rating on the stock.

“They can cut costs by jointly planning flights,” he said.

CAL, the largest operator of cross-strait flights, may boost its presence in China by cooperating with railways and other companies, Chang said.

The carrier and unit Mandarin Airlines (華信航空) had 29 percent of the cross-strait market last year, the Fair Trade Commission said on Thursday.

EVA Airways Corp (EVA, 長榮航空), the nation’s second-biggest carrier, had 21 percent.

There is demand for more direct cross-strait flights, which are limited by government accords, as 46 percent of travelers between Taiwan and China transit through Hong Kong, Chang said. Chinese tourist visits to Taiwan more than doubled last year to 1.23 million, according to statistics compiled by the Tourism Bureau.

Taiwan is also planning to let Chinese tourists visit individually rather than only allowing travel on tour group visas.

“There will be new demand, new opportunities and new clients,” Chang said. “We’re optimistic about growth and expansion of the market.”

CAL will this year expand its global reach by joining the -SkyTeam alliance, probably in August or September, Chang said. The grouping, which includes Air France-KLM and Delta Air Lines Inc, helps members through joint marketing and sales activities.

The Taiwanese carrier, which earned a record quarterly profit in the three months ending Sept. 30, will introduce four leased Airbus SAS A330s by early next year and could add other “readily available” planes, Chang said.

CAL is also due to receive 14 - on-order A350-900s between 2015 and 2018, he said.

The airline has options to buy six more.

Taiwan residents are making more long-haul overseas trips after EU nations and other countries started offering visa-free entry, Chang said. Including EU members, 97 countries and regions allow Taiwanese to enter without a visa or with a visa on arrival, according to the Ministry of Foreign Affairs.

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