Domestic-listed airlines EVA Airways Corp (EVA, 長榮航空) and TransAsia Airways Corp (TNA, 復興航空) both reported net losses for the first quarter of the year amid rising costs led by high aviation fuel prices.
EVA, the nation’s second--largest air carrier, posted NT$1.08 billion (US$36.82 million), or NT$0.33 per share, in net losses for the first quarter, improving from losses of NT$1.38 billion, or 0.43 per share, recorded in the fourth quarter of last year, the company said in its stock exchange filing on Friday.
However, the NT$1.08 billion loss was a major setback compared with NT$269.32 billion profit, or earnings per share of NT$0.08, recorded a year earlier, statistics showed.
The carrier’s performance in the first quarter was in line with a prediction that EVA Corp president Chang Kuo-wei (張國煒) made last month.
“I do not expect the company to earn a profit in the first quarter because of weak cargo demand in the first two months of the year,” Chang told reporters at the time.
In addition, rising crude oil prices would be a major source of uncertainty for the sector this year, Chang said.
The global price of crude oil has remained high this year amid unrest in the Middle East and international tensions over Iran’s nuclear activities.
These tensions drove oil prices up to a record-high level of US$144 per barrel, which increased cost pressures for the whole airline sector.
The same cost headwinds dragged down TNA’s profitability in the first quarter.
TNA, which mainly operates regional and cross-strait passenger routes, reported NT$21.39 million, or NT$0.04 per share, in net losses for the first quarter, marking its first quarterly loss in more than two years, Taiwan Stock Exchange data showed.
Analysts have forecast that China Airlines Ltd (CAL, 中華航空), Taiwan’s biggest air carrier, will also report a quarterly loss for the first quarter, a second straight quarter of net losses.
CAL is scheduled to release its first-quarter results today.
Because of the high fuel costs, Capital Securities Corp (群益證券) said it would be difficult for Taiwanese airlines to escape from another quarter of losses in the April-to-June period.
“The carriers will find it difficult to make a profit, even for middle to short-distance routes that require relatively little fuel,” the stock brokerage said in a report issued on Friday.
Looking ahead, cross-strait routes will remain the sector’s major driver, Capital Securities said, adding that rising Chinese tourism and expansion of the free independent traveler (FIT) program might provide some upside movement for the carriers’ stock prices.
Beginning on Saturday, the FIT program was opened to residents of Tianjin, Chongqing, Nanjing, Guangzhou, Hangzhou and Chengdu, in addition to those from Beijing, Shanghai and Xiamen, with the daily entry limit increasing from 500 to 1,000 people, the government announced earlier this month.