China Airlines Ltd (CAL, 中華航空) and EVA Airways Corp (長榮航空) shares yesterday continued their rally for a fourth day as the market welcomed news this week that the two airlines were each approved to receive relief loans of NT$20 billion (US$671.1 million).
CAL gained 1.6 percent to NT$8.25 and EVA rose 1.77 percent to NT$11.5 in Taipei trading.
They rose 17.35 percent and 16.16 percent respectively this week amid growing optimism about the reopening of major economies worldwide that would help boost airline stocks, analysts said.
However, CAL and EVA have this year seen their shares plunge about 20 percent and 25 percent respectively, Taiwan Stock Exchange data showed, as the COVID-19 pandemic has slashed demand for travel.
On Monday, Bank of Taiwan (台灣銀行) and other state-owned banks agreed to lend a total of NT$50 billion to CAL, EVA and Starlux Airlines Co (星宇航空), with the Small and Medium Business Credit Guarantee Fund (中小企業信保基金) saying in a statement that it would offer credit guarantees of 80 percent.
It was the first relief loan to airlines in the world, Minister of Transportation and Communications Lin Chia-lung (林佳龍) told reporters at an event in Taipei on Wednesday.
Bank of Taiwan is to provide NT$20 billion loans with a maturity of two years to CAL and EVA, while the banks are still discussing the amounts for Starlux, UNI Airways Corp (立榮航空) and Mandarin Airlines Ltd (華信航空), said a banking industry official, who declined to be named.
UNI Airways is a subsidiary of EVA, while Mandarin Airlines is a unit of CAL.
“We hope to receive a loan of NT$3 billion, which would help us pay employee salaries and office rents, as we, unlike our peers, have not cut staff nor asked them to take unpaid leave, so our personnel costs remain unchanged, despite the pandemic,” Starlux spokesman Nieh Kuo-wei (聶國維) told the Taipei Times by telephone on Wednesday.
The amount of the loan has not been finalized, Nieh added.
In establishing the relief scheme for airlines, the government set strict rules on how the funds can be used, with CAL and EVA saying that they would comply with the regulations.
Under the rules, airlines can use the funds to cover operational expenses, such as staff salaries, terminal charges, fuel costs and leasing fees, but cannot spend any to repay old debt, the companies said.
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