Fri, May 11, 2012 - Page 12 News List

Top carriers’ revenue drops amid weak cargo traffic

By Amy Su  /  Staff reporter

Despite steady growth in passenger traffic, the nation’s two largest airlines saw revenue fall last month, as cargo traffic weakened amid a seasonal slowdown.

China Airlines Ltd (CAL, 中華航空), the nation’s largest carrier, yesterday reported NT$10.94 billion (US$372.17 million) in revenue last month, down 1.44 percent from a month earlier, company data showed.

Revenue from its passenger business increased 1.18 percent from a month earlier to NT$6.84 billion, but cargo sales dropped 6.1 percent month-on-month to NT$3.69 billion due to weaker demand.

On an annual basis, the airline’s revenue grew 1.28 percent last month, with the passenger division posting an 11.4 percent increase, while the cargo division recorded a 12.56 percent drop.

Compared with CAL, the revenue of EVA Airways Corp (EVA, 長榮航空), the nation’s second-largest carrier, slid further last month from a month earlier.

EVA posted NT$8.52 billion in revenue last month, down 4.16 percent from March, according to data released on Wednesday.

Revenue from its passenger business totaled NT$5.02 billion last month, down 0.99 percent from a month earlier, while cargo sales slid 8.67 percent month-on-month to NT$2.95 billion, EVA said.

On an annual basis, the airline’s revenue rose 3.3 percent last month, with the passenger sector growing 11.8 percent from a year ago and the cargo sector dropping 9.23 percent.

Macquarie Securities retained its outperform ratings on both CAL and EVA after the two airlines released their sales results, citing easing fuel cost pressures and further benefits from potential favorable policy trends.

“As we are gradually entering the high season in the third quarter, we expect [the two airlines’] passenger data to continue to improve in the coming months,” Macqaurie Securities analyst Corinne Jian (簡秋萍) said in a report.

The brokerage house also expects to see further improvement in the two carriers’ cargo yields, saying the higher yields and cheaper fuel cost may start to be reflected in profitability in the second quarter.

Macquarie’s optimistic view on the airline sector was in line with EVA president Chang Kuo-wei’s (張國煒) forecasts.

Earlier this week, Chang said the company was confident it would return to profit in the third quarter on the back of seasonal passenger demand, adding that he hoped the firm would be able to break even in the first half of the year.

TransAsia Airways Corp (復興航空) — which focuses on passenger business — posted stronger revenue growth than the two larger carriers.

Revenue for TransAsia totaled NT$788.7 million, up 12.76 percent and 35.5 percent from a year and a month earlier respectively, company statistics showed.

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