Source: Taipei Times Author: Yu-huay Sun 05/19/2009
Subject Concerned: Airlines Aviation Fuel
China Airlines Ltd, Taiwan's largest carrier, said it can be profitable with crude oil prices of as high as US$60 a barrel, helped by an increased number of flights to mainland China.
"We'll do our best to turn a profit," chairman Philip Wei told shareholders on May 18 at the company's annual general meeting in Taipei. He didn't give a timeframe for the goal.
The airline has increased flights to mainland China as warmer cross-strait relations lead to an easing of travel restrictions.
The extra traffic may help the carrier end a run of six unprofitable quarters caused by fuel-hedging losses and slowing cargo and passenger demand amid the global recession.
The airline doesn't expect to report any hedging loss this quarter, Wei said. Still, swine flu has hurt travel demand with passenger numbers about 7 percent below expectations, he said.
On May 18, shareholders approved a plan to cancel 31 percent of the carrier's outstanding shares to boost per share net worth.
They also gave permission for the sale of as many as 1 billion new shares in a private placement within the next year.
The carrier hasn't received any approaches from possible investors in mainland China, Wei said. He didn't say what the airline's reaction to such an offer would be.
The carrier may also sell shares in a public offering in the second half of the year, the statement said, without giving any further details.
Crude oil for delivery next month rose as much as US$0.76, or 1.4 percent, to US$57.10 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at US$56.93 at 9:15am London time.