Taiwan’s China Airlines, EVA Airways suffer big losses

China Airlines Limited and EVA Airways Corporation, two of the biggest airlines in Taiwan, have joined several airlines worldwide in making record losses thanks to soaring prices of fuel.

The two companies will continue to post losses on account of high fuel prices and fierce competition in the airline sector, the newspaper International Herald Tribune quoted an analyst as predicting. “In the long term, the two airlines may have to consider merging or some sort of partnership to be relevant,” he added.

In a statement, China Airlines, Taiwan’s largest airline by revenue, said its net loss in the quarter January-March 2008 widened to NT$2.97 billion (US$97.7 million; €62.7 million), or NT$0.68 a share, from a net loss of NT$805.8 million, or NT$0.20 a share, a year earlier.

The figure was also higher than the net loss of NT$2.43 billion that China Airlines suffered in the fourth quarter of 2007 and exceeded the NT$2.52-billion net loss a year before.

In the first quarter of 2007, revenues of China Airlines had risen by 8.6% to NT$31.02 billion from NT$28.55 billion. During the same period, the company had to bear an operating loss of NT$2.42 billion from an operating profit of NT$656.9 million.

John Chang, vice-president for finance, China Airlines, was quoted as saying: “The main reason for the losses is fuel prices. Our fuel costs rose by NT$4.5 billion to NT$15 billion.”

The jet fuel costs of China Airlines as a percentage of total operating costs jumped to 46.5% in the first quarter from 39.7% in the first quarter of 2007 and from 44.7% in the fourth quarter.

It was, again, high fuel prices that harmed EVA Airways Corporation, Taiwan’s second-largest airline by revenue.

The first-quarter net loss of EVA Airways Corporation was NT$2.29 billion, or NT$0.59 a share – rising from a net loss of NT$331.3 million, or NT$0.09 a share the year before. The figure was also higher than its NT$975.7-million net loss in the fourth quarter of 2007, the company said in a statement.

Even while EVA Airways Corporation’ revenues in the first-quarter rose by 6 to NT$23.83 billion from NT$22.49 billion, its operating loss soared to NT$1.91 billion from NT$523.0 million a year earlier.

EVA Airways’ jet fuel costs as a percentage of total operating costs rose to 46% in the first quarter – up from 38% in the first quarter of 2007.

Meanwhile, the company’s operating costs rose by 12% year-on-year to NT$23.97 billion from NT$21.31 billion.

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