US visa news boosts airlines’ shares

UP, UP AND AWAY::After local media reported that the US is set to grant Taiwanese visa-free status, the share prices of the nation’s carriers rocketed on the local bourse

By Amy Su  /  Staff reporter

Wed, Oct 03, 2012 - Page 13

Share prices in the airline sector rallied yesterday on the back of news that Taiwan would soon be included in the US’ visa-waiver program.

Local media reported early yesterday that the US would announce it was awarding Taiwanese visitors visa-free status last night at the earliest. The measure would reportedly come into effect next month.

EVA Airways Corp’s (EVA, 長榮航空) stocks climbed 3.21 percent to close at NT$17.7 on the Taiwan Stock Exchange yesterday, while the share price of China Airlines Ltd (CAL, 中華航空), the nation’s largest carrier, rose 2.89 percent to close at NT$12.45.

Share prices of TransAsia Airways Corp (TNA, 復興航空), which mostly focuses on regional routes in Asia, also followed the sector’s rising trend by increasing 3.13 percent to close at NT$14.85, according to Taiwan Stock Exchange (TWSE) data.

“The US’ decision would have a positive effect on the company’s passenger revenue in the fourth quarter,” EVA president Chang Kuo-wei (張國煒) said on the sidelines of a press conference held by the airline’s subsidiary, Uni Airways Corp (立榮航空).

Compared with high-level passenger sales in July and August driven by strong seasonal demand, historical data showed that the airline usually posted lower revenue for passenger business in September and October, Chang said.

However, the US visa-waiver program may boost Taiwanese people’s interest in visiting the US next month and in December, further driving up the airline’s passenger revenue in the fourth quarter, Chang added.

Since the airline’s routes to the US have been performing dominantly for the past few years, Chang said the news may be especially advantageous for EVA’s passenger revenue.

The US routes accounted for nearly 40 percent of passenger sales recorded by the nation’s second-largest carrier last year, company statistics showed.

Meanwhile, Chang said cargo-sector revenue in the fourth quarter may be stronger than that in the third quarter, because newly launched electronic products would provide some impetus to freight demand.

However, the company’s profitability in the fourth quarter still depends on fuel costs, led by unpredictable global crude oil prices, Chang said.

Grand Cathay Investment Services Corp (大華投顧) yesterday said in a report that it held an optimistic view on the airline sector.

The report said that the sector might see its gross margin improve in the fourth quarter from the third quarter thanks to a recent downward trend in global crude oil prices.

In related news, Uni Air welcomed the arrival of its first ATR 72-600 aircraft at Taipei Songshan International Airport yesterday.

The aircraft is scheduled to start flying between Taipei and Taitung from Thursday next week.

Uni Air purchased 10 ATR 72-600 planes in September last year. The other nine aircraft are to be gradually delivered before September 2014.