China Airlines Holds 2022 Annual General Shareholders Meeting, Preps New Passenger and Cargo Capacity to Meet Market Expectations

China Airlines (TWSE: 2610) held its annual general shareholders meeting this morning (5/26) at Taipei Innovation City Convention Center. China Airlines Chairman Su-Chien Hsieh stated that the keys to the airline’s robust performance during 2021 were an agile business strategy, very competitive workforce, and government stimulus and support. As a result, China Airlines was one of the few companies in the global airline industry to turn a profit. The business strategy of “prioritize cargo over passengers” adopted by China Airlines not only achieved record-breaking cargo revenues but also became the lifeline of Taiwan’s industries and economy. The airline also endeavored to support global epidemic prevention efforts, transporting more than 100 million doses of COVID-19 vaccine to date. 

For 2021, China Airlines (individual) reported revenues of TWD 132.14 billion, net operating profit of TWD 19.32 billion, net profit before tax of TWD11.974 billion, and earnings per share (EPS) of TWD 1.67. The majority of profits were generated by cargo operations. The China Airlines team worked together to adapt to changes in the airline market and build a trusted air cargo service. The fleet of 21 freighters surpassed TWD 100 billion in annual revenues with up to 117 freighter flights a week. Thanks to the effective dispatching of passenger aircraft, more than 250 cargo-only flights were enabled, taking advantage of cargo belly capacity and maximizing cargo revenues. 

China Airlines continued to optimize its fleet operations and revitalize its air assets. In response to the high-performance and better fuel efficiency aircraft trend, China Airlines launched a two-pronged expansion of both its passenger and cargo fleet. The next-generation A321neo passenger aircraft started delivering at the end of 2021 and is being progressively deployed on Northeast Asia, Southeast Asia and cross-strait routes. The 777F freighters entered service at the end of 2020, when the global air cargo industry hit a new peak, becoming a key revenue earner too. 

Optimizing its configuration of passenger and cargo aircraft capacity to increase freighter use and focus on more profitable niche routes, China Airlines took advantage of the fourth quarter, traditionally a peak cargo season marked by Western holiday shopping. Continued congestion in sea cargo made market demand for air cargo slots even more acute, driving up shipping rates. At the same time, China Airlines consolidated its passenger and cargo networks to connect 39 destinations in 17 countries across Asia, Europe and the Americas. The move increased 2021 cargo revenues by 52.09% compared to 2020. A new all-time record for single-quarter cargo revenues was also set despite the COVID-19 pandemic. 

As the world continues to battle the COVID-19 pandemic, the freight market continues to be plagued by sea cargo congestion, container shortages, and bottlenecks in the supply chain with no relief in sight. The safety, stability and speed of air cargo is therefore expected to remain the main driver of revenue growth for airlines. China Airlines has taken delivery of four 777F freighters so far and more are on the books. The freighter fleet is expected to grow to 23 aircraft in Q4, powerfully boosting profitability. Another four 777F freighters will begin arriving in 2023 with deliveries to be completed in 2024. Profitability will reach new levels as China Airlines will have the largest freighter fleet and most comprehensive network among Taiwanese carriers once deliveries are complete. 

In terms of passenger operations, there are currently widespread restrictions due to border controls and strict quarantine measures. The emergence of new COVID-19 variants in Q4 last year also led to a drastic reduction in traveler numbers, mass flight cancellations, and further reductions in passenger demand. As a result, 2021 passenger revenue was down 83.26% compared to 2020. China Airlines is actively preparing for passenger demand this year. As each country brings the pandemic under control and loosens its border restrictions, China Airlines plans to add more flights on each route and adjust the frequency of passenger services in response. The new A321neo aircraft will be used to optimize product offerings on regional routes and will compete for high-margin third and fourth freedom passenger sources to meet market and passenger expectations. The pandemic has spurred the development of new services including non-contact services in partnership with the SkyTeam Alliance. By optimizing the airport check-in process and reducing the need for personnel contact during transits, China Airlines is developing a safer journey and improving traveler confidence in air travel. 

The global economy is beginning to show signs of recovery but there are still many confounding factors in the post-pandemic era. Faced with the COVID-19 pandemic, a fast-changing market, and rising aviation fuel prices, the management team at China Airlines continues to maintain a cautious and flexible approach, dynamically adjusting passenger and cargo sales strategies in response to changes in the market. The current advantage in cargo operations will be leveraged to consolidate China Airlines’ position in niche markets. China Airlines continues to promote initiatives related to corporate sustainability by actively engaging in risk control and management strategies. Rolling adjustments will be made to the management systems, in accordance with international standards on corporate governance and market developments, with the aim of strengthening the internal culture of sustainable government and growing amidst adversity.