Taiwan Ratings Corp (
TRC, a partner of global ratings agency Standard and Poor's, affirmed China Airlines' airline issuer credit rating as "twBBB+/Negative/twA-2" and unsecured corporate bond rating as "twBBB," it said in a statement.
"China Airlines' debt protection measures and financial flexibility have remained commensurate with its current rating level despite the current adverse conditions for the worldwide airline industry in the wake of the Sept. 11 attacks," Taiwan Ratings said.
The ratings continued to reflect China Airlines' strong market position on its major routes and its improving operating efficiency and cost structure, it said.
However, these factors were largely offset by the challenging industry environment and increasing competition from EVA Airways Corp (長榮) as well as its below-average safety record, it added.
China Airlines' passenger load factor, which accounted for 63 percent of its revenues, has declined since the terror attacks on the US, especially its transpacific routes.
But its cargo transportation business, which accounted for 32 percent of its revenues, has increased by 20 percent.
"The outlook for the rating is negative," which reflects the fact that the challenging operating environment may persist until the second half of next year, TRC said.
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