Fri, Aug 12, 2011 - Page 12 News List

CAL expecting to get back in the black

By Amy Su  /  Staff Reporter

China Airlines Ltd (CAL, 中華航空), the nation’s largest air carrier, expects to turn a loss into a profit in the third quarter on the back of momentum in its passenger business and lower oil prices, following a lower-than-expected loss in the second quarter.

“The company’s third-quarter profit may cover the loss in the first half of the year,” a company official, who declined to be named, told the Taipei Times yesterday.

Strong seasonal passenger demand would be a major factor boosting revenue and profit in the third quarter, with the average passenger load moving above 80 percent, the official said.

The official said aviation fuel prices may slow in the second half amid rising uncertainty about the economies in the US and Europe, lowering the company’s costs.

“Although the weaker economies in the US and Europe may have a negative influence on revenues, lower fuel costs — which account for 40 percent of overall costs — will help more,” the official said.

Aviation fuel hit an annual high of US$138 a barrel in May, but it has since dropped to US$119 a barrel.

The official said the carrier’s loss in the second quarter might be lower than the NT$379.09 million (US$13.05 million) loss posted in the first quarter, and beat market expectations.

“The company’s hedge on crude oil prices helped lower the losses in the second quarter,” the official said.

The company plans to charter an additional A330 jet before the end of the year as it increases its cross-strait flights, CAL said.

CAL reported minus-NT$0.08 earnings per share in the first quarter, compared with a profit of NT$2.56 billion, or NT$8.2 per share, in the same period the previous year, company data showed.

The company’s revenues reached NT$12.27 billion last month, up 11.14 percent from the previous month.

CAL shares fell 1.26 percent to close at NT$15.7 on the Taiwan Stock Exchange yesterday.

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