Fri, Jun 22, 2012 - Page 13 News List

EVA airlines says it will go back to black this month

By Amy Su  /  Staff reporter

EVA Airways Corp (EVA, 長榮航空), the nation’s second-largest air carrier, yesterday said it expected to return to the black this month, with profitability further rebounding in the third quarter on the back of strong seasonal demand in the passenger sector and a trend of falling crude oil prices.

However, it has been almost impossible for EVA to break even in the first half of the year, following the airline’s posting of NT$1.08 billion (US$36.11 million), or NT$0.33 per share, in net losses for the first quarter, a company official said.

“We are confident the company is turning loss into gain this month, with company performance further improving in the third quarter,” EVA chairman James Jeng (鄭光遠) told a media briefing after the company’s annual shareholders’ meeting.

Strong seasonal demand from the passenger sector will be a main factor in driving up EVA’s profitability in the July to September quarter, with cross-strait routes remaining the biggest driver of profits, Jeng said.

Passenger loads on routes between Taiwan and first-tier cities in China are expected to remain high, as usual, he said.

EVA’s cross-strait routes to second-tier and third-tier cities in China will also start making a profit next month amid rising dependence from residents in these cities, he added.

Meanwhile, the recent downturn of global crude oil prices has helped reduce air carriers’ costs.

Jeng said he expected the cost of aviation fuel to decline further in the near future, in line with the decreasing trend of crude oil prices.

EVA president Chang Kuo-wei (張國煒) shared Jeng’s views. He said there was still speculation in the crude oil market, which has kept its prices out of line with fundamental supply and demand conditions.

However, EVA will be able to make a profit in the second half of the year if the current downturn trend of crude oil prices continues, Chang said.

Facing the rise of low-cost carriers, the airline industry has been entering an era of polarization, with carriers either adopting a high-quality strategy to lure luxury passengers or choosing to attract customers with low prices to maintain their competitiveness, Chang said.

In EVA’s case, Chang said the airline would continue to upgrade its service and fleet quality to maintain its relatively high ticket prices.

Shareholders approved a plan to allow EVA to not provide any share dividends this year, reserving last year’s net income of NT$209.03 million, or NT$0.06 per share, for future investment.

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