China Airlines Ltd (CAL, 中華航空), the nation’s largest air carrier, expects its earnings in the first half of this year to fall substantially from a year earlier because of the continuing calamity in Japan and rising oil prices, officials said yesterday.
CAL earned NT$6.27 billion (US$212.6 million) in the first half of last year, the company’s financial data showed.
“The massive earthquake in Japan had an obvious impact on CAL’s business, as Japan is one of the countries to which Taiwanese prefer to travel,” chairman Chang Chia-juch (張家祝) said in a media gathering.
Following international disasters such as quakes in New Zealand and Japan, as well as conflict in Libya that increased oil prices, CAL’s earnings in the first half of this year would not reach the same level as a year earlier, Chang said.
“It is definitely a hard year for the airline industry, but CAL has prepared for the worst,” CAL president Sun Hung-hsiang (孫洪祥) said.
The company has decided not to cancel any flights to Tokyo to handle continuing demand from people in disaster-stricken areas who want to come back to Taiwan, Sun said.
However, CAL planned to reduce its Taipei-Sapporo flights from seven to two per week starting from April 1, as the number of tourists traveling to the region decreased sharply following the March 11 earthquake, Sun said.
As for other Japan routes, CAL spokesman Hamilton Liu (劉國芊) said by telephone yesterday that the company has not made a decision about reducing the number of flights.
Currently, revenues from CAL’s eight Japan routes account for about 20 percent of all passenger revenues, while the average passenger load factor for CAL’s flights from Japan is still 80 percent, company data showed.
Share prices of CAL rose 0.56 percent to NT$17.8 on the Taiwan Stock Exchange yesterday. The stock has declined 4.04 percent since March 11, when the massive earthquake and tsunami hit Japan.
Although international disasters raised uncertainty for CAL this year, the company will still spend US$100 million upgrading hardware on nine 747 aircraft, Chang said.
“The upgrade for one of these aircrafts will be completed by next month, while all the others will be completed by May,” Chang said.
The air carrier also expected its cargo business to be a driver for this year, as cargo revenue would start to rise from this month, Sun said.
CAL planned to increase its number of cargo flights to Vietnam to four per week and operate one cargo flight to Singapore per month, from next month. Cargo revenue currently accounts for between 40 percent and 45 percent of CAL’s overall revenue, data showed.
Sun also looked to more passenger business driven by increasing cross-strait flights and the government allowing independent Chinese tourists, possibly beginning in June.
“We are still considering the possibility of increasing the number of cross-strait flights and routes, but we have not finalized anything,” Sun said.
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