EVA Airways Corp (EVA, 長榮航空), the nation’s second-largest carrier, plunged to a five-year low in Taipei trading after offering to sell new shares valued at about NT$4.86 billion (US$160 million) to fund aircraft purchases.
The airline fell by the 7 percent daily limit to NT$9.72, the lowest since May 22, 2003. The company will sell 500 million new shares, it said yesterday. The potential value of the sale was calculated based on yesterday’s closing price.
EVA and larger rival China Airlines Ltd (中華航空) have both dropped more than 30 percent in the past month as they cut services to offset jet-fuel prices that have almost doubled in a year. Both carriers also posted wider than expected losses in the first quarter.
The share sale plan is like “an emergency rights issue to cover huge losses,” Paul Dewberry, a Merrill Lynch & Co analyst, said in a report yesterday. EVA Airways “remains in difficulty and we should continue to short the stock.”
EVA acting spokeswoman Katherine Ko (柯文玲) denied that share sale was an emergency measure.
“The company has planned this rights issue for a long time,” she said. It “doesn’t have anything to do with the losses” in the first quarter.
The airline, based in Taoyuan County, posted a NT$2.29 billion loss in the period.
The new shares will help pay for three Boeing Co 777-300ERs due to be delivered by the end of 2010, Ko said.
The share sale is expected to be completed in November or December, she said.
TRANSASIA
Domestic transporter TransAsia Airways Corp (復興航空) confirmed yesterday it was abandoning its Taipei-Kaohsiung and Taipei-Tainan flight routes because of sluggish business.
The decision would be effective Aug. 1, TransAsia spokeswoman Janet So (湛華生) said yesterday during a telephone interview.
TransAsia Airways had to redirect its resources to fly more profitable routes such as cross-strait charter flights, she said.
The carrier’s decision to discontinue the north-south services came amid increasing pressure on domestic carriers from rising fuel costs and competition with the high-speed rail.
The move means that starting next month, there will no longer be flights from Taipei’s Songshan Airport to Kaohsiung and Tainan.
High-speed rail tickets from Taipei to Kaohsiung are NT$1,190 on weekdays and NT$1,490 on weekends and holidays.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS