October 7, 1999, Taipei, Taiwan -- China Airlines announced on October 6 that the Ministry of Transportation and Communication had approved the acquisition of operating rights for the first-stage privatization of the air cargo terminal at Taoyuan International Airport and the reconstruction rights for the air cargo terminal at Kaohsiung International Airport by a China Airlines-led alliance consisting of Far Eastern Air Transport, UPS of the United States, Everterminal, and other partners, as well as China Airlines itself. Overall investment in the venture is expected to total NT$30.4 billion over the next 15 years; as a result, the two terminals' annual cargo volume is projected to soar to 3 million metric tons, up from 800,000 metric tons now. China Airlines and the Civil Aeronautics Administration expect that the contract negotiations will be completed within a month, and that the formal transfer of operations of the existing air cargo terminal to the alliance will take place on January 16 next year.

China Airlines began organizing the alliance with Far Eastern Air Transport, UPS, Everterminal, the Taoyuan International Airport Services Co., and the Taiwan Airport Services Co. three years ago for the purpose of bidding on this project, which is the biggest air transport investment case in Taiwan. The venture is to be capitalized at NT$2.5 billion; China Airlines will hold 62% of the total, Far Eastern 20%, and UPS 8%, with the remaining 10% being shared by Everterminal, Taoyuan International Airport Services, Taiwan Airport Services, and several air freight forwarders. China Airlines reports that in addition to agreeing to assure the transfer of the existing air cargo terminal's 500-plus employees, during the bidding process it also promised to protect their job rights for five years, to promote the IATA Cargo 2000 system, and to provide job training to the employees that will be transferred.

" With China Airlines' aviation professionals and the experience we have built up over 40 years of civil aviation development," commented China Airlines Chairman H.I. Chiang, "we are confident that we can turn the first-stage air cargo terminal into a modern warehousing center, and that we will be able to play our part in the government's plan to build Taiwan into an Asia-Pacific operations center and to speed up the development of this island into an Asia-pacific air cargo hub." In addition, China Airlines President Sandy Liu stressed, "China Airlines has been the most important customer of the Taipei and Kaohsiung air cargo terminals for the past 30 years, and with China Airlines taking over those terminals in their privatization process we will be able to retain the confidence of our customers and our employees in the operation of these cargo terminals as well as guarantee the steady growth of our business."

China Airlines is vigorously expanding its air cargo service, and in 1997 became one of the world's top 10 air cargo carriers. With a fleet that now totals 58 aircraft and with 17 more Boeing 747-400 freighters to be delivered by 2007, the company is busily expanding its cargo route network and has opened new direct routes to Chicago, Atlanta, Miami, and Sydney. China Airlines and other air carriers which it represents currently account for almost 45% of all air cargo shipped into and out of Taiwan, and for approximately 70% of all cargo handled at the Taipei and Kaohsiung cargo terminals.

After the first-stage air cargo terminals at Taoyuan International Airport is completed, the new alliance -- with the participation of UPS, the world's largest express delivery airline; Far Eastern Air Transport, Taiwan's largest domestic air carrier; Everterminal, a long-established off-airport cargo terminal; Taoyuan International Airport Service Co. and Taiwan Airport Service Co., both professional ground handlers, and several major freight forwarders -- the new alliance will be be able to offer more modernized, more convenient air cargo services in Taiwan.