China Airlines released its 2021 operating results on March 15. The following consolidated numbers were reported: operating revenue of TWD 138.841 billion, operating profit of TWD 14.968 billion, net profit before tax of TWD 11.127 billion, and net profit after tax of TWD 8.957 million. TWD 9.38 billion in net profit attributable to the owner of the company was reported with earnings per share (EPS) of TWD 1.67, up TWD 1.64 compared to the 2020 EPS of TWD 0.03.
China Airlines Chairman Su-Chien Hsieh stated that even as the global airline industry continues to feel the impact of COVID-19, the company maintained its business strategy of “prioritizing cargo over passengers” and adopted diversified sales strategies to boost cargo revenues. Outstanding yield management by the cargo team increased overall utilization of freighters and generated a 24% growth in annual cargo capacity in 2021. Thanks to the industrious pilots in the cockpit as well as close cooperation between maintenance, ground staff and other units, China Airlines experienced explosive growth and generated record cargo revenues of TWD 124.5 billion, the highest ever in the 62-year history of the carrier.
While the passenger market still showed no signs of recovery, China Airlines took full advantage of the traditional peak cargo season and the opportunities offered by Western holiday shopping. The entire fleet of 21 freighters, supplemented by the belly hold of passenger aircraft, was used to effectively integrate the carrying capacity and network of passenger aircraft and freighters. Q4 cargo revenue reached a record high of TWD 43.2 billion, a 67% jump over the same period last year; annual cargo revenue also grew by 52% in 2021 compared to 2020. The emergence of new COVID-19 variants forced countries to maintain border restrictions on passenger services and the relatively strict quarantine measures in Taiwan continued to have an effect on the number of travelers as well. In 2021 Q4, passenger revenue amounted to TWD 1.495 billion and was 26% higher than Q3. Nevertheless, annual passenger revenue remained 76% lower in 2021 compared to 2020.
Looking at the cargo market in the year ahead. The introduction of new 777F freighters is expected to contribute to further business growth and, where market demand and overall capacity permit, trans-oceanic operations will be expanded. Newly allocated air rights will also be leveraged to secure opportunities from beyond rights. The passenger/cargo aircraft capacity and networks will be reviewed and adjusted as necessary to form alliances with local airlines and expand our operations. During the first half of the year, sea freight continued to be affected by confounding factors such as port congestion and labor shortages but demand for sea-to-air cargo remained strong. Market supply of total hold capacity is expected to remain tight with the charter market poised to stay active. China Airlines will capitalize on its freighter fleet by competing for such cargo sources as semiconductor machinery, e-commerce, and consumer electronics. Tailored charter programs will also be developed for projects and customers with particular emphasis being given to high-priority and high-value cargo charter flights, boosting the profitability.
In terms of passenger service, rising aviation fuel prices are putting pressure on the operation of long-haul passenger routes. China Airlines will proceed with cautious optimism. In order to seize opportunities when the passenger market recovers, China Airlines will continue to meet inelastic demand on key trunk routes and closely monitor market demand in line with national quarantine regulations. Destinations will be progressively reopened or additional flights will be assigned and adjustments will be made to the overall market portfolio on a rolling basis. The introduction of the new A321neo aircraft will be used to enhance product offerings on regional routes that recover early and once Taiwan's border and transit restrictions are relaxed, the aircraft will be introduced on Northeast Asia, Southeast Asia and cross-strait routes. When appropriate, network connections will be restored in preparation for the post-COVID-19 era.
China Airlines continues to optimize its fleet. Two 777F freighters are expected to be introduced this year bringing the total freighter fleet to 23 aircraft. Four newly ordered 777F freighters will begin arriving in 2023. Once the new aircraft are all delivered in 2024 they will significantly boost China Airlines’ already impressive cargo capacity. Eight of the new A321neo passenger aircraft are scheduled for delivery this year and will become the mainstay of regional services.
China Airlines is a global carrier that aims to become “the preferred airline of Taiwan.” It has responded to a fast-changing market through outstanding management flexibility and operational agility initiatives. Long-term strategies in all ESG aspects have been adopted to improve business performance across the board, implement management mechanisms based on international standards, promote the physical and mental well-being of aircraft crews, as well as strengthen epidemic prevention measures for employees and travelers. Concrete actions are being taken to carry out the ideals of an inclusive society and transform China Airlines into an industry leader in sustainable development.
