China Air's new chairman takes the throttle

TOUGH TASK: Chiang Yao-chung has no experience in the airline industry yet he faces the challenge of having to reform the famously crash-prone national flag carrier


Fri, Jul 30, 2004 - Page 10

Facing heavy expectations to reform the nation's largest air carrier, Chiang Yao-chung (江耀宗), former vice chairman of the Public Construction Commission, yesterday took over the chairmanship of China Airlines (華航) from Lee Yun-ling (李雲寧).

"My first task will be to transform China Airlines into a trustworthy carrier and increase its visibility in the international community," Chiang said at the handover ceremony.

When asked how he planned to improve the company's safety performance, considering that he has little experience in the airline industry, Chiang said he would strengthen discipline and ensure workers follow standard operating procedures, adhere to procedures outlined in flight manuals and perform maintenance work rigorously.

Though the airline is one of Taiwan's national symbols, its reputation has suffered because of five major crashes in 11 years.

Chiang also said that he would visit his Chinese counterparts at an appropriate time to look into the possibility of tighter cooperation.

Eyeing the huge potential in the Chinese market, China Airlines had planned to buy a 25 percent stake in China Cargo Airlines Ltd (中國貨運航空) under China Eastern Airlines Corp (中國東方航空) for US$47 million. The investment was approved by Beijing last April but the project was then suspended, reportedly for political reasons.

Regarding the issue of privatization and the company's share offerings to designated investors, Chiang said the issues would be decided by the China Aviation Development Foundation, which holds a 71 percent stake in the company. He said he would ensure workers' interests and benefits during the process.

Though air carriers worldwide have seen sagging profits recently as a result of surging fuel costs, Chiang said he was confident that the company would achieve its financial forecasts for this year.

He added that its passenger load factor this month has hit 83.7 percent and that the same figure for the cargo sector reached 75 percent -- both showing robust growth.

In the first half of the year, the airline hedged 80 percent of its oil requirements at US$35 a barrel, which helped the company save NT$800 million in fuel costs, said president and chief executive officer Philip Wei (魏幸雄).

For the first half of the year, the airline reported a pre-tax profit of NT$1.3 billion, 41 percent of its goal of NT$3.15 billion. The earnings per share in the same period was NT$0.43.

Shares of China Airlines stock yesterday advanced NT$0.10 to close at N$16.70 on the TAIEX.