EVA Airways Corp (EVA, 長榮航空) saw its consolidated sales for last year hit a record level, but analysts said the Taiwanese airline sector faces challenges this year, including continued weak cargo demand and increased competition from budget airlines.
On Friday, the nation’s second-largest carrier reported its consolidated revenue for last month rose 0.69 percent year-on-year and 0.58 percent month-on-month to NT$10.33 billion (US$341.92 million), citing strong performance in passenger business.
That brought its consolidated sales for last year to an annual increase of 3.33 percent to NT$124.16 billion, marking the highest-ever level.
The company’s financial data showed that passenger business was the major sales driver, with revenue increasing 8 percent from a year earlier to NT$71.1 billion.
In contrast, cargo business contracted by 6.7 percent to NT$32.03 billion, affected by weak export momentum amid a lackluster global economy and increased competition from rivals in the region.
However, Citigroup Global Market Inc analyst Timothy Chen (陳建光) said the rise of low-cost carriers (LCC) could pose a potential challenge for EVA.
“Taiwan is in an ideal location for low-cost carriers because the flight time to most destinations in Southeast and Northeast Asia is within four hours,” Chen said in a client note on Thursday.
“Although LCC’s presence in Taiwan is still small with total seats from budget carriers accounting for only 4 percent of total international flights from Taiwan, the rapid share gains by the carriers since 2009 raises concerns on increased competition in the future,” he said.
CHINA AIRLINES DOWN
Compared with EVA, China Airlines (CAL, 中華航空), the nation’s largest carrier, reported a slight decrease in sales for last year due to poor cargo traffic.
Consolidated revenue inched down 0.24 percent last year to NT$140.25 billion from a year ago, the company said in its stock exchange filing on Friday.
Last month alone, sales grew 8.1 percent month-on-month, but declined 0.79 percent year-on-year to NT$11.35 billion, the filing showed.
CAL has not yet released its latest sales breakdown for passenger and cargo business.
In the first 11 months of last year, passenger sales stood at NT$84.17 billion, rising 6.3 percent year-on-year, while revenue from its cargo business slid 4 percent to NT$35.79 billion, according to the company’s data.
SinoPac Securities Investment Service (永豐金投顧) said CAL may see consolidated sales for this year return to growth on the back of the company’s plans to either open new routes or raise flight frequency to China, Japan and Canada.
Meanwhile, TransAsia Airways Corp (TNA, 復興航空) — which focuses on regional passenger business — said on Friday that sales totaled NT$864.04 million last month, down 0.36 percent and 11.35 percent from a year and a month earlier respectively.
For the whole of last year, the carrier’s revenue hit a record level of NT$12.13 billion, up 20.88 percent from 2012, the company said in a statement.