Bearish on cargo sector, EVA to reduce fleet

By Amy Su  /  Staff reporter

Tue, Jun 18, 2013 - Page 13

EVA Airways Corp (EVA, 長榮航空) plans to dispose of five cargo aircraft over the next three years, citing its bearish view on the air cargo sector, EVA chairman Chang Kuo-wei (張國煒) said yesterday.

This would reduce EVA’s cargo fleet to around 10 freighters.

The nation’s second-largest carrier also expects revenue performance and profitability in the third quarter to remain flat from a year earlier on the back of stagnant passenger business, Chang said.

“We have not seen any positive sign for the cargo business,” he told a media briefing after unveiling a new advertisement to mark the airline’s official entry into the Star Alliance.

As well as the sluggish momentum in global trading volume, the size of products commonly transported by cargo freighter — mostly electronic products like smartphones and cameras — has become smaller, further slowing demand in the air cargo sector, Chang said.

“The structure of the air cargo sector has been changing,” he said.

The cargo business accounted for around 35 percent of EVA’s overall revenue last year, down from a record-high level of nearly 50 percent, Chang said, adding that the proportion of revenue generated by the cargo sector may remain relatively low in the near future.

Compared with the bearish sentiment for the air cargo sector, the prospects for EVA’s passenger business look brighter in the third quarter — the traditional peak period.

However, revenue and profitability from July to September look set to remain flat from a year earlier, following a number of issues that have affected the passenger sector in the first half of this year, such as tensions on the Korean Peninsula, the spat between Taiwan and the Philippines and the H7N9 avian influenza.

“Thus far, there has not been a full recovery following the negative impact of H7N9,” Chang said.

However, Chang said joining the Star Alliance — the world’s largest airline network — may help EVA raise its passenger load by 2 percent to 3 percent.

The move will also boost EVA’s network, with the number of countries reachable by the airline rising to 195 and destinations to 1,328.

The airline is to become the 28th member of the Star Alliance today, with a signing ceremony to be held in the afternoon.

Chang attributed EVA’s ability to join the alliance to its advantages in cross-strait routes, which have been reconized by various global airline alliances.

EVA posted a net loss of NT$917.02 million (US$30.6 million), or NT$0.28 per share, in the first three months of the year, compared with NT$714.5 million, or NT$0.22 per share, recorded a year earlier, stock exchange data showed.

Meanwhile, TransAsia Airways Corp (TNA, 復興航空) yesterday said it will begin a regular service between Taipei and Chiang Mai, Thailand, on July 3 offering two flights per week.

It will be the fourth international route opened by TNA this year, after it launched regular services to Bangkok; Ishigaki, Japan, and Zhangjiajie, China, in the first half of this year, TNA said in a statement.