Taiwan's airline carriers see fatter profits in 2005 amid oil-price drop

Taipei, Dec. 17, 2004 (CENS)--Thanks to the recovery of the international air transportation market, Taiwan's top three air carriers, including China Airlines Ltd. (CAL), Eva Airways Corp. and Far East Transport Corp., will make higher profits in 2005 from this year's levels.

Due to the growth in passenger and cargo shipment, CAL, Eva and Far East recently boast they would grab profits more than earlier-set goal this year. If the international oil price continues to drop, CAL will see annual profits top NT$5 billion (US$155.27 million at US$1:NT$32.2) and Far East will enjoy substantial growth in sales, in 2005.

Because of the hike in international oil price, the three airways have seen a squeeze of profits despite the imposition of fuel surcharges on passenger and cargo transportation. For instance, CAL has to increase budget of NT$8 billion (US$248.44 million) in annual fuel expenditure this year. Far East claimed it would see the erosion of NT$400 million (US$12.42 million) in profits because of the oil price hike this year.

But the airways boast their profits will maintain growth year-on-year this year because of the recovery of the passenger and cargo transportation market, the rebound of air cargo transportation fees, and the growth of travelers going abroad.

CAL said it posted NT$200 million (US$6.21 million) in monthly pretax earnings in November. The company registered NT$4.1 billion (US$127.32 million) in cumulative pretax earnings in the first 11 months of this year, more than its projected annual earnings of NT$4.05 billion (US$125.77 million). The company estimated it would be able to grab NT$4.2 billion (US$130.43 million) in pretax earnings to hit an all-time record this year.

Because of the better-than-expected performance of the international air transportation market, Eva estimated it would post more pretax earnings than projected NT$3.1 billion (US$96.27 million) this year.

Far East said it registered NT$1.1 billion (US$34.16 million) in sales from operating 10 international routes in the first 11 months of this year, compared to NT$700 million (US$21.73 million) posted in the same period of last year. The company boasted NT$53 million (US$1.64 million) in pretax earnings in November, compared to a loss of NT$25 million (US$776,300) posted in the corresponding period of last year.

Despite the oil price hike, Far East registered NT$18 million (US$559,000) in cumulative pretax earnings in the first 11 months of this year, compared to a loss of NT$200 million (US$6.21 million) posted in the same period of last year. The company estimated it would be able to brush off operating losses over the past three years and begin to make breakeven this year.

As the international oil price is expected to go down, Far East said it would see annual pretax earnings hit the range of between NT$300 million (US$9.31 million) and NT$500 million (US$15.52 million) in 2005.