Thu, Jan 12, 2012 - Page 11 News List

CAL, EVA post sales decline, despite passenger growth

By Amy Su  /  Staff Reporter

Despite posting record-high levels in passenger revenue for last year, overall sales of the nation’s two largest airlines both fell from a year ago amid persistently weak demand for their cargo businesses.

China Airlines Ltd (CAL, 中華航空), the nation’s largest air carrier, on Monday posted NT$11.5 billion (US$383.35 million) in revenues for last month, up 0.67 percent from a year ago and 10.56 percent from a month earlier, according to data provided by the company.

That brought revenue at the air carrier for last year to NT$132.3 billion, down 4.23 percent from the previous year, CAL data showed.

Passenger revenue grew 7 percent from a year earlier to NT$80.9 billion last year, the highest level in the company’s history, while cargo revenue shed 18.3 percent year-on-year to NT$46.39 billion.

EVA Airways Corp (EVA, 長榮航空), Taiwan’s second-largest carrier, also posted a similar results last year.

It reported NT$102.2 billion in revenues last month, down 2.12 percent from a year earlier, according to the company’s financial data released on Monday.

Revenue from EVA’s passenger business hit a record high of NT$59.51 billion, up 5 percent from a year ago.

Revenue at its cargo business declined 11.5 percent year-on-year to NT$36.56 billion.

Last month, EVA posted NT$8.56 billion in revenues, down 1.28 percent from a year ago, but up 7.8 percent from a month earlier, data showed.

Primasia Investment Consultancy Co said any recovery in the cargo sector would be unlikely in the first half of this year.

“Given the fragile global economic conditions, with European sovereign debt repayments expected to peak in the first half of the year, along with slowing Taiwanese exports, the airfreight business for Taiwanese airlines will remain sluggish,” Primasia said in a research note on Tuesday.

On the passenger side, the consultancy expected the sector to benefit from additional cross-strait flights and the Taiwan-Japan open skies agreement, although downside risk exists as passenger sales performance historically lags cargo business.

However, despite the growing importance of the Chinese market for Taiwan’s airline sector, Primasia said there would not be a significant post-election rally for the airline sector, even if the Chinese Nationalist Party (KMT) and President Ma Ying-jeou (馬英九) win.

“Any impact from further deregulation in cross-strait flights will not be as significant as earlier deregulations to Taiwan airlines’ operations,” Primasia said, adding that the current quota of 558 flights a week already covers 78 percent of total cross-strait demand.

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