Shares in China Airlines Ltd (CAL, 中華航空) and EVA Airways (長榮航空) staged a rally in heavy trading yesterday on high hopes that admission into the US’ Visa Waiver Program (VWP) could increase visitor numbers to that country and lift airlines’ profits, dealers said.
CAL closed up 6.17 percent at NT$12.90 with 28.19 million shares changing hands, while EVA Air ended up 3.5 percent at NT$19.20 on a trading volume of 25.59 million shares.
“After a recent sell-off, these airline stocks appeared very attractive in terms of valuations,” MasterLink Securities (元富證券) analyst Tom Tang (湯忠謙) said.
“The US visa-waiver lead prompted many bargain hunters to pick up the shares,” Tang said.
The American Institute in Taiwan announced on Thursday that Taiwan had been officially nominated as a candidate for the VWP, paving the path for the nation to join the program, which has been a major foreign policy goal for many years.
Taiwan’s admission to the VWP would save visitors about NT$4,340 in visa fees and spare them the process of applying for a US visa.
CAL and EVA Air said the carriers looked forward to Taiwan’s admission into the program and expected it to increase the number of Taiwanese passengers on their flights to US cities by at least 50 percent, though Tang said that remained to be seen.
“I do not think investors should be too optimistic about the VWP as the global economy is slowing down and it will drag down demand for international travel,” he said. “The carriers’ bottom lines are under threat from the economic uncertainty.”