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.
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