Wed, Aug 29, 2012 - Page 14 News List

Foreign brokers cautious despite fall in CAL losses

TURNAROUND:While China Airlines remained in the red, smaller carrier TransAsia Airways was back in the black, with a second-quarter profit of NT$66.93 million

By Amy Su  /  Staff reporter

Although China Airlines (CAL, 中華航空) saw its net loss shrink in the second quarter of the year, foreign brokerage houses maintained their cautious view of the nation’s largest carrier.

CAL posted a net loss of NT$99.9 million (US$3.33 million) last quarter — a significant improvement from a loss of NT$940.33 million in the first quarter, the company said in a stock exchange filing on Friday.

On an annual basis, it was also an improvement from the NT$282.41 million loss it reported during the same period last year, company data showed.

JPMorgan attributed the carrier’s smaller loss to stronger seasonal demand for its passenger service.

“But we still view consensus full-year net profit forecast of NT$1.3 billion to be on the optimistic side,” JPMorgan analyst Corrine Png (方華婷) said in the report.

Png said that seasonality might have helped CAL post a stronger top line and better earnings in the second quarter of this year, but the recent rebound in aviation fuel prices could mean higher costs for carriers if they are sustained.

Meanwhile, rising competition, led by low-cost carriers on Japan’s routes, has raised concern over CAL’s long-term development, Png added.

Credit Suisse analyst Timothy Ross said in a report on Monday that CAL would continue to face cost pressure in the third quarter and beyond.

However, for the full year, Ross expected CAL to report a net profit of NT$1.71 million, or earnings per share (EPS) of NT$0.37 per share, on the back of some improvement in freight volumes and revenues for the third quarter, led by a bounce in sales of information technology-related products.

For the first six months of the year, CAL posted a net loss of NT$1.04 billion, or a loss per share of NT$0.23, compared with a loss of NT$661.5 million, or NT$0.17 per share, in the same period last year, data showed.

Unlike the nation’s largest airline, TransAsia Airways Corp (TNA, 復興航空) — which focuses on regional routes — returned to the black in the first half of the year.

TransAsia posted a net profit of NT$45.54 million, or EPS of NT$0.08, in the first six months of the year, aided by earnings of NT$66.93 million in the second quarter, the company said in a press release.

As for EVA Airways Corp (EVA, 長榮航空), which will announce its results later this week, analysts expected the carrier to also report a marked improvement.

EVA, Taiwan’s second-largest air carrier, posted a net loss of NT$1.08 billion, or a loss per share of NT$0.33, in the first quarter, company data showed.

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