China Airlines Expects Higher Sales This Year

With its passenger and freight transport businesses both rising steadily, China Airlines Ltd., Taiwan's largest airline by fleet size, expects better performance this year than last year, according to the chairman, H.H. Sun, at an investor conference held earlier.

The chairman bases his optimism on the statistics compiled by the Tourism Bureau, which says that in the first four months of this year, Taiwan's visitor arrivals surged 25% year-on-year (YoY), with outbound departures of nationals also rising 6.9%, hence driving China Airlines's passenger transport business so far this year.

Based on ticket bookings so far for the upcoming summer vacation, Sun said, his company will see nice performance in the months to come, though ticket prices are being cut to some extent mainly due to the emergence of low-cost carriers.

As for freight transport, Sun reported that the business has gradually recovered since Q4, 2013 and is expected to improve this year over last year. With rising sales, however, the chairman admitted that freightage may not rebound as strongly as volume in the short term for some reasons.

Other factors driving the airline's sales growth this year is the addition of three Boeing 777-300ER narrow-body jets to its fleet, to be delivered continually starting in September. Sun says that the new aircrafts feature greater fuel efficiency than existing 747 models, so are expected to help the airline cut operating costs by around NT$300 million (US$10 million) each a year after commissioning.

In fact China Airlines plans to introduce 10 such airplanes during 2014-2016, and will soon continually take delivery of 14 Airbus A350 twin-engine, wide-body jets it had ordered, showing ambition to upgrade fleets and improve overall performance.

Additionally, China Airlines will also gain steam starting next year from its reinvested Tigerair Taiwan, a low-cost carrier jointly established with Singapore-based Tiger Airways and scheduled to take off in Q4, 2014. Therefore, the Taiwanese airline, institutional investors said, has good reason to believe its future will continue to improve.

Dampened by the weakening global transport market, the company posted revenue of NT$131.7 billion (US$4.39 billion) last year, down 0.29% YoY, and suffered net losses of NT$1.274 billion (US$42.46 million), or NT$0.25 per share.

For the first five months of this year, the firm's revenue totaled around NT$59.73 billion (US$1.991 billion), higher than NT$55.52 billion (US$1.85 billion) achieved a year ago. (SC)