Brent Hannon/TAIPEI
EVA Airways has dropped plans to purchase 12 Airbus A340-500 and -600s after posting its first loss in over three years. The privately owned Taiwanese airline was among the launch customers for the new Rolls-Royce Trent 500-powered 313/380-seat A340 family, even though it never got beyond placing a letter of intent (LoI) last November for six firm orders, plus six options, for aircraft to operate new long-haul routes.
The deal was considered a coup for Airbus, as EVA has an all-Boeing fleet and the order was its first for Airbus aircraft.
Y S Chang, chairman of parent company Evergreen, personally cancelled the letter of intent in a rare intervention into EVA operations. Significantly EVA, which had not firmed up the LoI, will pay no cancellation penalties to Airbus, says junior vice-president K W Nieh. He says the decision to cancel the A340 deal has nothing to do with pressure from Boeing to buy the rival 777-200X, but was an EVA group decision to limit capacity for the foreseeable future.
EVA's first-half loss of $17 million came despite a 9.6% rise in revenues to $591 million. EVA says that the acquisition of three Boeing 747-400s this year, along with two new Boeing MD-11 freighters, due to arrive by December, pushed the airline into the red.
After early losses, EVA has since improved financial trends, culminating in a $22 million profit last year. The 1998 first-half loss has delayed plans to list on the local stock exchange by up to two years.
EVA's load factor fell to 70.5% for the first six months of this year, down 3%from the same period in 1997, and yields dropped in the wake of price cutting by rival China Airlines (CAL), which wanted to boost traffic after its February Airbus A300 crash which killed 202 people. CAL earlier announced a 1998 first-half loss of $45 million, its first deficit in 12 years.
The CAL A300 accident, followed closely by a Formosa Airlines crash which killed 13 people in March, eroded travellers' confidence in Taiwan, cutting outbound travel by 10% in the first six months of the year, says the Taiwan Tourism Bureau.
Source: Flight International
