Tue, Aug 14, 2018 - Page 12 News List

EVA consolidating two subsidiaries to boost efficiency

SHARE SWAP:Aircraft maintenance specialist Evergreen Aviation Technologies is to merge with airframe and aircraft engine parts maker Evergreen Aviation Precision

By Ted Chen  /  Staff reporter

EVA Airways Corp (長榮航空) yesterday announced plans to consolidate two aerospace subsidiaries to achieve economies of scale and greater efficiency.

Evergreen Aviation Technologies Corp (EGAT, 長榮航太), one of the nation’s leading aircraft maintenance, repair and overhaul firms, is to wholly acquire Evergreen Aviation Precision (EGAP, 長榮航宇精密), an airframe and aircraft engine parts manufacturer, through a share swap.

EGAT, the surviving company, is to issue 16.64 million new shares to raise NT$166 million (US$5.39 million) to carry out the share swap, EVA Air said in a filing to the Taiwan Stock Exchange.

The share swap ratio would be 12.6154 EGAP share for 1 EGAT share, with the completion date tentatively set for Dec. 31, pending regulatory approval.

Following the merger, EGAT’s paid-in capital would increase to NT$6.53 billion, up from NT$6.36 billion during its establishment in 1997.

EGAP was founded in 2012 with paid-in capital of NT$3 billion. While it has earned service and supply chain certification from Boeing Co and General Electric (GE) Co, it has also accumulated NT$1.35 billion in losses.

It would take more time for EGAP to turn profitable, EVA Air spokesperson J.C. Kuo (柯金城) said, adding that its operating losses have narrowed over the years.

Together, EGAP and EGAT contributed about NT$1 billion in profits, EVA said.

It is hoped that EGAT, which services more than 40 airlines worldwide, would be able to introduce more business opportunities to EGAP, Kuo said.

EGAT has expanded into aerospace manufacturing through a joint venture with GE to service the US company’s GEnx high-bypass turbofan jet engines.

It is also collaborating with Boeing to convert older 767 wide-body jets into cargo aircraft.

Meanwhile, EVA reported that net income in the first half of this year rose 298.01 percent annually to NT$3.34 billion. Earnings per share were NT$0.8.

Sales in the first six months rose 11.71 percent annually to NT$87.43 billion, with gross margin improving to 11.72 percent from 10.93 percent a year ago.

The carrier said that it has benefited from its cautious outlook on fuel rises and that its hedging efforts had helped boost profits in the first six months of this year as fuel prices dropped below its expectations.

Higher airfare for premium economy and business class seats and passenger load factor during the peak summer travel season also helped profitability, the carrier added.

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