TAIPEI, Taiwan – EVA Airways Corp saw its consolidated sales for last year hit a record level, but analysts said the Taiwanese airline sector faces challenges this year, including continued weak cargo demand and increased competition from budget airlines.
On Friday, the nationโs second-largest carrier reported its consolidated revenue for last month rose 0.69 percent year-on-year and 0.58 percent month-on-month to NT$10.33 billion (US$341.92 million), citing strong performance in passenger business.
That brought its consolidated sales for last year to an annual increase of 3.33 percent to NT$124.16 billion, marking the highest-ever level.
The companyโs financial data showed that passenger business was the major sales driver, with revenue increasing 8 percent from a year earlier to NT$71.1 billion.
CARGO BUSINESS
In contrast, cargo business contracted by 6.7 percent to NT$32.03 billion, affected by weak export momentum amid a lackluster global economy and increased competition from rivals in the region.
However, Citigroup Global Market Inc analyst Timothy Chen said the rise of low-cost carriers (LCC) could pose a potential challenge for EVA.
IDEAL LOCATION
โTaiwan is in an ideal location for low-cost carriers because the flight time to most destinations in Southeast and Northeast Asia is within four hours,โ Chen said in a client note on Thursday.
โAlthough LCCโs presence in Taiwan is still small with total seats from budget carriers accounting for only 4 percent of total international flights from Taiwan, the rapid share gains by the carriers since 2009 raises concerns on increased competition in the future,โ he said.
CHINA AIRLINES DOWN
Compared with EVA, China Airlines, the nationโs largest carrier, reported a slight decrease in sales for last year due to poor cargo traffic.
Consolidated revenue inched down 0.24 percent last year to NT$140.25 billion from a year ago, the company said in its stock exchange filing on Friday.
Last month alone, sales grew 8.1 percent month-on-month, but declined 0.79 percent year-on-year to NT$11.35 billion, the filing showed.
CAL has not yet released its latest sales breakdown for passenger and cargo business.
In the first 11 months of last year, passenger sales stood at NT$84.17 billion, rising 6.3 percent year-on-year, while revenue from its cargo business slid 4 percent to NT$35.79 billion, according to the companyโs data.
MORE FLIGHTS?
SinoPac Securities Investment Service said CAL may see consolidated sales for this year return to growth on the back of the companyโs plans to either open new routes or raise flight frequency to China, Japan and Canada.
Meanwhile, TransAsia Airways Corp โ which focuses on regional passenger business โ said on Friday that sales totaled NT$864.04 million last month, down 0.36 percent and 11.35 percent from a year and a month earlier respectively.
For the whole of last year, the carrierโs revenue hit a record level of NT$12.13 billion, up 20.88 percent from 2012, the company said in a statement.