China Airlines Ltd (CAL, 中華航空), the nation’s largest carrier, may see its war-risk insurance premium rate double this year amid increasing geopolitical unease around the world, a company executive said yesterday.
“At present, we can only say that war-risk insurance rates may increase,” CAL chairman Sun Hung-hsiang (孫洪祥) told a media briefing after unveiling a plane painted with the nation’s lead dance troupe — the Cloud Gate Dance Theatre — at its maintenance plant in Taoyuan.
Sun’s remark came after the Chinese-language China Times reported last week that CAL could see its insurance fees rise by more than 10 percent when it renews its insurance contract in October because of increasing geopolitical uncertainties.
Photo: CNA
Sun acknowledged that political tensions have been rising in countries like Libya and Pakistan, and after a Malaysia Airlines plane was shot down last week over Ukraine.
The global unease may change the terms of war-risk insurance contracts between carriers and insurers, possibly leading to a doubling of insurance rates, he added.
However, Sun said he did not expect the rate increase to be a heavy burden on the carrier, as war-risk insurance accounts for less than 10 percent of its total insurance fees.
In general, CAL has seen its annual insurance payment drop by between 10 percent and 15 percent per year over the past five or six years, on the back of its improving flight safety record, Sun said.
China Airlines posted NT$72.26 billion (US$2.41 billion) in consolidated sales for the first six months of the year, up 7.5 percent from a year earlier, the company said in a filing to the Taiwan Stock Exchange.
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