EVA Airways Corp (長榮航空) yesterday gave an upbeat outlook for this year and said that the company is counting on rising passenger numbers to offset declining unit revenue as intensifying competition drives down ticket prices.
The company has set its sights on increasing its revenue passenger kilometers (RPK) by 20 percent this year by adding more flights to European and North American destinations, as well as key cities in China, EVA corporate planning division executive vice president Albert Liao (廖至維) said at the company’s first earnings conference in its 28-year history.
However, Liao said that some flights and destinations in China would be cut this year and redirected to other Asian destinations as uncertainties in cross-strait relations continue to affect sales.
He added that sales from flights to China registered their first decline last year.
Although unit revenue last year fell 9.8 percent annually to NT$2.1 from NT$2.3 the previous year, total passenger revenue posted a 4.7 percent year-on-year gain to NT$85.75 billion (US$2.82 billion) as RPK rose 17.2 percent year-on-year to 51.17 billion, Liao said.
He said the passenger load factor would remain stable this year at about 80 percent, after the figure last year dipped 0.8 percentage points from 2015.
The company gave a more reserved outlook for its cargo business due to oversupply and declining freight rates.
Cargo revenue last year fell 20.1 percent year-on-year to NT$20.84 billion, while unit revenue fell 18.4 percent to NT$5.8, the company said.
The highly anticipated iPhone 8 handset would help stimulate demand for cargo transport this year, he said.
The company is adding four Airbus A330-300 and seven Boeing 777-300ER airliners to its fleet this year, as well as a Boeing 777F cargo aircraft, EVA president Derek Chen (陳憲弘) said.
Capital expenditure is forecast at NT$25 billion this year, Chen said, while outlining plans to hire an additional 350 cabin crew and 150 pilots to support an increased number of flights.
Meanwhile, Chen said that the government’s new labor rules would mean annual payroll expenses increase by about NT$200 million.
Chen said that the company is not expecting any labor issues this year as negotiations with its union are due to begin next week, adding that wages were raised by between 2 and 3 percent last year.
The company posted net income of NT$1.75 billion last quarter, down 25 percent year-on-year, or earnings per share of NT$0.28, with sales rising 4.5 percent year-on-year to NT$34.91 billion.
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