Sat, Oct 20, 2001 page24

• China Air to cut profit forecast

  NOT-SO-FRIENDLY SKIES The nation's largest airline will cut its profit forecast by 53 percent, but is still faring better than others when it comes to personnel cutbacks

  • BLOOMBERG AND CNA
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  China Airlines Co (華航), Taiwan's largest carrier, announced yesterday in a statement that it will cut its 2001 profit forecast by 53 percent as the Sept. 11 terrorist attacks in the US and slowing economies worldwide cut demand for air travel.

  The carrier expects to report a 2001 net income of NT$1.4 billion (US$41 million), down from an earlier forecast of NT$3 billion, the company said in a statement.

  China Airlines last week cut its pretax profit estimate by 57 percent. Sales are expected to total NT$70.6 billion for the year, down from an earlier prediction of NT$79.1 billion, the company said.

  "Airlines worldwide are squeezed by a shrinking market and rising costs after the Sept. 11 terrorist attacks and US-led war against Afghanistan," company spokesman Paul Wang (王振畬) said.

  Airlines worldwide are suffering as demand for air travel fall in the aftermath of last month's attacks. US-led military strikes against Afghanistan are expected to delay a recovery further.

  Taiwan exports, many of which are transported by air, are falling as global demand for computer chips and other electronic goods slows. Exports suffered the biggest decline on record in September after terrorist attacks disrupted shipments to the US, Taiwan's largest trade partner.

  "The island's domestic demand is also falling," Wang said.

  The downturn of international economic prospects and severe competition have forced the faltering domestic airlines to resort to personnel or salary cuts to reduce their operational costs.

  A spokesman for Far East Air Transport Corp (遠航) said yesterday that the airline plans to reduce its 1,600-strong payroll by a third, while the company might also be forced to cut salaries if its early retirement program cannot be carried out smoothly.

  Since Oct. 1, EVA Airways Corp (長榮) has cut 17 flights per week. Although the company refused to disclose the scale of personnel cuts, company spokesman Nei Kuo-wei (聶國偉) said that about 100 contracted foreign pilots have already been dismissed.

  TransAsia Airways (復興) reduced its personnel strength several years ago when the company ran into operational difficulties. A spokesman said that for the moment, the airline has no plans to cut any of the remaining 1,300 personnel on its payroll.

  Mandarin Airlines (華信), with a staff of 702, will seek salary cuts to ride out the market sluggishness, according to a spokesman.

  China Airlines Co (華航) might be the only airline still managing to make a profit. Company spokesman Paul Wang said that no personnel cuts are planned, but new vacancies would not be filled in the next few months.

  For your information

  Clipping their wings

  * China Air said no personnel cuts are planned, but new vacancies will not be filled. * Far East Air said it plans to reduce its payroll by a third and may be forced to cut salaries. * Since Oct. 1, EVA Airways has cut 17 flights per week. EVA officials refused to disclose the scale of its personnel cuts. * TransAsia Airways has no plans to cut personnel. * Mandarin Airlines will seek salary cuts.
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