Taiwan Ratings Corp (中華信評) on Thursday raised its outlook on China Airlines Ltd (CAL, 中華航空) from “negative” to “stable” on expectations that the nation’s largest air cargo operator would benefit from elevated cargo demand and strong air freight rates next year, it said.
The local arm of S&P Global Ratings forecast demand for air cargo to remain at a comparatively high level next year due to strong consumer demand in the US and Europe, growing trade volume and ongoing disruption of sea shipping, it said in a report.
Because of Taiwan’s favorable geographic location in Asia, CAL is likely to receive high orders over the next 12 months, it said.
Photo courtesy of China Airlines
A quick recovery in air cargo capacity is not likely, as air travel would still be subdued, limiting the cargo capacity offered by passenger flights; therefore, CAL’s cargo load factor is expected to stay above pre-COVID-19 pandemic levels, and air freights rates are forecast to continue to stay at strong levels this year, the company said.
Air travel could slowly pick up next year, given that some Asian countries have reopened international travel, but improvement of passenger traffic for CAL is expected to be limited in the first half of next year in light of ongoing border controls and quarantine requirements for international tourists, Taiwan Ratings said.
However, many governments plan to ease their restrictions after their vaccination rates reach sufficient levels, laying ground for rebounding passenger flights, the company said.
Taiwan Ratings holds a mixed outlook for CAL for 2023. The ratings agency is upbeat for CAL’s passenger business, but holds conservative expectations for air cargo business.
It forecasts air cargo demand to soften in 2023 and 2024, as disruption of sea shipping should ease, and demand from developed countries to restock could also fall after their inventory-to-sales ratios return to adequate levels from the current historic lows; therefore, cargo rates should retreat, casting pressure on air cargo yields, it said.
However, passenger traffic would likely accelerate its recovery in 2023 on the back of resumed demand for leisure travel, and the rebound in passenger flights should help CAL mitigate the impact of a possible decline in cargo revenue and support the airline’s cash flow generation, it said.
Intra-Asia flights were the biggest revenue contributor to CAL before the pandemic, constituting about 70 percent of the airline’s passenger revenue, it added.
Taiwan’s technology protection rules prohibits Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) from producing 2-nanometer chips abroad, so the company must keep its most cutting-edge technology at home, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. Kuo made the remarks in response to concerns that TSMC might be forced to produce advanced 2-nanometer chips at its fabs in Arizona ahead of schedule after former US president Donald Trump was re-elected as the next US president on Tuesday. “Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently,” Kuo said at a meeting of the legislature’s
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS