Air Transport World

EVA retrenches

Rapid growth will be replaced by consolidation in light of Asia's economic problems

TAIPEI-Despite seven years of dramatic growth, the last two of them profitable, Taiwan's EVA Air is concerned about its future. The dramatic downturn in Asia's economies, coupled with issues unique to Taiwan's airlines, have persuaded EVA that the current year won't be as good as those preceding. This has prompted the carrier to see the present as a time of consolidation as opposed to rapid expansion.

"Now, the challenge we are facing is to be an efficient and profitable operation," said Daniel Wu jiang-ming, executive vice president of EVA's Corporate Planning Div. "Before, the target was to make this company a company."

This first challenge of establishing routes and creating its infrastructure is one in which EVA has been 'quite successful," said Wu. Certainly, the airline has produced some pretty impressive growth statistics.

In 1991, its first year of operations, EVA moved just 140,000 passengers, achieving a load factor of 60%. By 1996, it was carrying 4.2 million passengers per year at a load factor of 73.6%. Last year, with East Asian economies sinking rapidly, the passenger total dipped slightly to 4.1 million, with a load factor of 71.4%.

Over the 1991-97 period, cargo carried increased from 45,000 tonnes to 314,782 tonnes. Revenues rose from $37.8 million in 1991 to $378 million in 1993 and in 1997, the figure was $1.3 billion. Profits though, have not followed such a glistening trajectory, despite the last three years showing a modicum of black ink. In 1991, losses were $45 million, although by 1995, this had become a profit of $7.2 million.

In 1996, the profit was a slender $17.1 million on a turnover of $1.3 billion. Last year, profit rose sharply to $29.7 million on the lower traffic and revenue base.

Expectation, though, is that it will not stick and that the coming year will see finances get worse. One source, who asked not to be named, talked of the carrier's slipping back into the red despite increasing revenues. …

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