Thu, Jun 13, 2013 - Page 14 News List

EVA eyes sales boost as it closes out alliance bid

SKY-HIGH:While analysts said that joining the Star Alliance would boost sales, their forecasts were much less optimistic than those made by EVA last year

By Amy Su  /  Staff reporter

EVA Airways Corp (EVA, 長榮航空), the nation’s second-largest airline, announced on Monday that it is to become an official member of the Star Alliance on Tuesday next week, more than a year after beginning the integration process.

The company is to become the 28th member of the world’s largest passenger airline alliance.

In March last year, EVA chairman Chang Kuo-wei (張國煒), who was the airline’s president at the time, said the carrier’s move to join the alliance would raise its passenger revenue by 20 percent this year from a year ago.

Analysts also expect the move to boost EVA’s passenger business, but in general their forecasts were less upbeat than Chang’s.

JPMorgan said in a report on Tuesday that the move is expected to raise the carrier’s sales in the coming quarter, with the number of passengers on international routes set to rise by between 3 percent and 5 percent .

Capital Securities Corp (群益證券) matched JPMorgan’s forecast on passenger growth, citing benefits from code sharing and network expansion offered by Star Alliance.

Joining the global network may further increase the airline’s passenger business next year, given EVA’s plan to increase its number of routes and frequency of flights to the US, as it aims to grab a higher market share, the local brokerage said in its latest report.

EVA posted NT$9.94 billion (US$329.58 million) in revenue last month, up 4.82 percent from a year ago and up 4.08 percent from the previous month, a company filing to the stock exchange showed.

JPMorgan analyst Corrine Png (方華婷) said EVA’s passenger revenue last month was in line with seasonal levels, but the company’s increase in cargo revenue — rising 5 percent from April — was much better than usual seasonal levels and indicated upside momentum over the coming months.

Separately, China Airlines Ltd (CAL, 中華航空), the nation’s largest carrier, reported that its revenue for last month declined 4.76 percent year-on-year and 3.49 percent month-on-month to NT$11.06 billion, stock exchange data showed.

The carrier’s cargo sales also improved last month from a month earlier, but slower passenger business dragged down the company’s overall revenue.

China Airlines joined the SkyTeam Alliance, the world’s second-largest passenger airlines alliance, in September 2011. The company had hoped that joining the alliance would boost its annual revenue by between 1 percent and 7 percent.

Meanwhile, TransAsia Airways Corp (TNA, 復興航空) — which focuses on regional Asian routes — posted NT$928.93 million in sales last month, up 10.52 percent from a year earlier but down 12.12 percent from the previous month, during the traditional weak period for the passenger sector.

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