Wed, Mar 19, 2014 - Page 14 News List

CAL optimistic, despite posting sales contraction

ROSIER OUTLOOK:Strong momentum at subsidiary Mandarin Airlines could be a major driver, while low-cost carrier Tigerair Taiwan is being launched in November

By Amy Su  /  Staff reporter

China Airlines Ltd (CAL, 中華航空), the nation’s largest carrier, expects consolidated sales to return to growth this year, following a 0.24 percent year-on-year contraction last year, citing steady momentum in its passenger business and a mild recovery in cargo demand.

The carrier posted NT$140.25 billion (US$4.62 billion) in consolidated sales for the whole of last year, down from NT$140.59 billion in 2012, marking its first contraction since 2009, a company filing to the stock exchange showed.

However, CAL is maintaining a cautiously optimistic view of its business this year, targeting NT$150 billion in annual consolidated revenue.

“This will be a very exciting year [for the company],” CAL chairman Sun Hung-hsiang (孫洪祥) told a media briefing yesterday.

The global economy may gradually improve from last year, with demand in the aviation cargo sector, which has been sluggish for years, starting to recover in the fourth quarter last year, Sun said.

Even though freight rates are still at relatively low levels, Sun said the rise in demand in the cargo sector — which has shown a 20 percent year-on-year expansion over the past few months — may at least keep the sector’s sales flat from last year.

As for the firm’s passenger business, Sun said the company is set to raise its capacity by between 7 percent and 8 percent this year, aiming to increase its number of destinations and the frequency of flights on routes to Japan, South Korea and other southeast Asian countries.

Strong momentum at the firm’s subsidiaries may be the other major driver for CAL’s business this year.

Tigerair Taiwan (台灣虎航), a low-cost carrier (LCC) venture between CAL and Tiger Airways Pte of Singapore, is set to start operations in November.

“It could be difficult to make a profit on the carrier in its first year of operations, but we have an advantage in the LCC industry as a first mover in Taiwan,” Sun said.

Mandarin Airlines (華信航空), a wholly owned subsidiary of CAL focusing on domestic services and cross-strait routes, is targeting 30 percent growth in annual sales and aims to break even this year.

The carrier expects revenue to reach NT$9.6 billion this year, up from NT$7.42 billion recorded last year, the company said in a statement.

Mandarin Airlines launched a cargo business for general goods in November last year and plans to open a logistics station in Taichung in August, aiming to raise the company’s annual cargo revenue by NT$20 million.

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