China Airlines Ltd (CAL, 中華航空), Taiwan’s largest carrier, made its biggest quarterly profit in five years because of an economic rebound and the addition of more flights to China.
The carrier had a net income of NT$1.18 billion (US$37 million) in the three months ended December, compared with a loss of NT$19.9 billion a year earlier.
The fourth-quarter profit, derived from full-year results announced yesterday, was less than the NT$1.27 billion median of five analyst estimates compiled by Bloomberg. However, the quarterly figure was the highest since the third quarter of 2004.
CAL and EVA Airways Corp (長榮航空) boosted services to China, after the two sides across the Taiwan Strait agreed to more than double the total number of cross-strait flights to 270 a week from Aug. 31. Travel and cargo demand also improved as Taiwan exited a recession.
“China Airlines is out of the woods now, as demand has returned to levels before the global financial crisis,” said Peter Tzeng (曾耀德), a Taipei-based Polaris Securities Co (寶來證券), who has an “equalweight” rating on the stock. “The golden routes with China have helped.”
CAL’s loss narrowed to NT$3.8 billion last year, or NT$1.04 a share, from NT$32.4 billion, or NT$10.25 in 2008, it said in a filing to the Taiwan Stock Exchange yesterday. The carrier made a full-year gain of NT$2.53 billion from revaluing financial assets, such as fuel-hedging contracts.
Shares of CAL fell 0.9 percent to NT$11.05 at the close of trading in Taipei. The benchmark TAIEX index rose 0.19 percent.
Separately, the company said its board yesterday approved a proposal to issue as much as NT$5 billion in unsecured bonds in a private placement to repay debt. The three-year bonds would have an interest rate of 2.8 percent, a separate exchange filing said yesterday.
As the company continued losses last year, CAL said its board proposed canceling distribution of dividends to shareholders, while its board of directors would receive no compensation and no bonuses for employees, the company said in a separate exchange filing yesterday.
The carrier will seek shareholder approval for the bond sale and other proposals at the June 29 annual general meeting.
Additional reporting by Kevin Chen
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