Thu, Jun 14, 2012 - Page 12 News List

CAL shifting further away from air cargo business amid trend

TINY COMPUTERS:The air carrier said the electronics industry would move most of its production toward smaller, thinner, lighter products in the near future

By Amy Su  /  Staff reporter

A woman holds up a smartphone at a press conference announcing China Airlines’ newly launched booking service application for smartphone users in Taipei yesterday.

Photo: Fang Pin-chao, Taipei Times

China Airlines Ltd (CAL, 中華航空), the nation’s largest air carrier, plans to gradually cut cargo sales to 30 percent of its business, from 35 percent, as it expects slow demand in the air cargo sector to be a long-term trend, a company official said yesterday.

However, the airline said its cargo business most likely bottomed out in the past two months and that it could show stable growth in the near future.

“The worst time for the cargo business has passed,” CAL president Sun Hung-hsiang (孫洪祥) told reporters on the sidelines of a press conference about the company’s newly launched booking service application for smartphone users.

However, because of long-term trends in the electronics industry — the main source of the airline’s cargo business — toward producing thinner and lighter products, as well as slowing trade volume worldwide, it is necessary to cut capacity, Sun said.

The expansion of short-haul passenger routes to China and Japan might help increase that sector’s revenue proportion, while dragging down the revenue proportion of the cargo sector, he said.

Sun said CAL plans to gradually decrease the capacity of its cargo business to 30 percent. The cargo sector currently accounts for 35 percent of the carrier’s overall revenue. Historically, it has reached a high of 45 percent.

The air carrier said it also -expected profitability to rebound from the second quarter amid lower costs caused by decreasing fuel prices and an expected increase in seasonal passenger demand in the third quarter.

CAL posted NT$940.33 million (US$31.37 million), or NT$0.19 per share, in net losses for the first quarter because of rising costs, company financial data showed.

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