Kevin O'Toole/LONDON
A return in confidence among Taiwanese travellers has lifted profits at China Airlines (CAL)over the first half of 1997, and the airline expects better to come during the rest of the year, which includes Taiwan's peak holiday season.
CAL posted pre-tax profits of nearly NT$1.76 billion ($62 million) for the first six months. A year ago the airline had reached only NT$385 million, partly because of political tension with China over the Taiwanese Straits, and uncertainties about the local economy.
With the improved start to the year, CAL is confident of reaching a profit target of nearly NT$3.3 billion for the whole of 1997, marking a return to the levels of profitability achieved in the early 1990s before the carrier was hit by a slump in Taiwan's tourist traffic, especially on routes to mainland China via Hong Kong. In 1996, CAL posted full-year pre-tax profits of less than NT$1.9 billion.
Confidence appears to have fully recovered so far this year with a boom in passenger traffic and a 13% growth in first-half sales to above NT$28 billion. Outbound passenger numbers jumped by 15%, while growth on domestic routes was at 11%. Overall, passenger traffic growth was better than 8%, helping load factors edge above 1996's 74%, while strong trade flows pushed cargo load factors close to 88%.
The airline says that, at the same time, yields "remained stable", while unit costs dipped, aided by a stabilisation in fuel prices and the early effects of a new five-year strategy put in place in 1996. That included cuts in the workforce, which combined with rising sales has seen productivity mushroom.
CAL expects figures for the second half of 1997 to be "even better", including the country's peak summer vacation period and several major public holidays. This month the airline also starts taking delivery of five further widebodies, including three Boeing 747-400s, a 747-200 freighter, one MD-11 and an Airbus A300-600R. That will take the airline's fleet to 50 aircraft.
China's Hainan Airlines reports a net profit of ´70 million ($8.5 million) for the first six months of the year, on sales of ´560 million. The carrier, which was recently listed on the Shanghai stock exchange, is expected to end the year with profits of around ´150 million, say analysts.
Source: Flight International
