China Airlines Ltd (CAL, 中華航空) on Tuesday gave a positive outlook on earnings, as anticipated sales growth from its cargo and passenger transport arms are expected to offset rising fuel costs.
Following a lull in the first three months of the year, demand for cargo transport began to pick up this quarter, with the growth momentum expected to persist until the end of the year, driven by steady economic growth across the globe, the company said.
CAL’s air cargo division last year registered 21.54 percent annual growth to total NT$42.97 billion (US$1.45 billion), of which 58 percent came from trans-Pacific routes, followed by Southeast Asia at 16 percent and Europe at 13 percent, it said.
It was the seventh-largest air cargo carrier in the world last year, transporting about 1.33 million tonnes, CAL said, citing International Air Transport Association estimates.
The association also forecasts that global cargo traffic is to grow another 4.5 percent this year, CAL said.
Looking ahead, the company said it would focus on growing its main air cargo markets in Japan and Southeast Asia, and would optimize its long-haul routes to the US and Europe.
Regarding passenger transport, a round of optimization implemented last year has begun to bear fruit, as cutting red-eye flights has led to improved operating efficiency, CAL said.
Total passenger transport capacity has increased 4.5 percent this year, as the company received four Airbus A350 airliners to be deployed to destinations in Europe and the US’ west coast.
CAL president Hsieh Shih-chien (謝世謙) said that since the beginning of the year, fuel prices have surged from US$65 per barrel to US$80, which would translate to additional costs of NT$8.5 billion this year.
However, the effects of higher fuel prices would be reduced to about NT$5.1 billion, offset by fees such as bunker surcharges, Hsieh said.
The company’s earnings this year would not be slowed by asset impairment charges and antitrust penalties totaling NT$5.3 billion that were booked last year, Hsieh said.
A stronger New Taiwan dollar would also bring an additional tailwind for earnings, as the company’s US dollar-denominated expenses exceed its receivables, he added.
The company reported that sales last quarter rose 10.75 percent annually to NT$39.64 billion, with air cargo revenue rising 14.25 percent annually to NT$10.18 billion and passenger revenue gaining 9.32 percent annually to NT$25.73 billion.
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