In addition, the relief provided by lower fuel prices in the fourth quarter was overshadowed by falling demand resulting from the global economic recession. The non-operating loss was NTD26.48 billion, as year-end fuel-hedging losses reached NTD21.05 billion.
 
China Airlines, like many other international carriers, uses fuel-hedging facilities to stabilize fuel costs. When fuel prices rose in the first three quarters of 2008, China Airlines benefited from its hedging strategy, and achieved a fuel cost saving of NTD12.98 billion. As a result of the record high fuel prices in first three quarters of 2008, CAL had a mark-to-market gain of NTD2.38 billion on fuel hedging, lowering operating costs significantly. Toward the end of 2008, the fuel price dropped from its record highs of last spring to a multi-year low of USD44.6 per barrel.
 
Nevertheless, CAL is optimistic about 2009, given the lower fuel prices, the success of direct links with mainland China, and its continuous cost saving efforts. China Airlines also expects more direct flights to result from upcoming cross-strait talks in the near future. With its expanding network and its polished and professional service that consistently ranks among the top 10 in the world, China Airlines is confident that this will be a more prosperous year.
 

(c) Centre for Asia Pacific Aviation. Date posted: 06-Apr-09

In-depth analysis of the Chinese airline and airport sectors, including latest traffic and financial reports and outlooks, is available each month in the Monthly Essential China.

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