StarLux Airlines assessing capital injection amid mounting losses

Taiwan's StarLux Airlines is assessing how much capital it will try to raise next year given that its NT$6.1 billion (US$218.88 million) in losses since starting commercial flights in January 2020 have taken a sizable bite out of its working capital.

StarLux will need a capital injection because the amount of debt due in the next 12 months is larger than the cash reserves it is required to hold by the Civil Aeronautics Administration (CAA), the CAA's latest report on the operations of Taiwanese carriers said.

Asked about the company's financial situation, StarLux spokesman Nieh Kuo-wei (???) told CNA that the carrier is planning to raise more funds next year, but is still evaluating the size of the capital infusion it will target.

Starlux posted a loss of NT$2.21 billion in the first nine months of 2021 after losing nearly NT$3.92 billion last year, adding up to more than half of its registered capital, which was increased to NT$11.36 billion from NT$8.3 billion in late 2020, CAA data showed.

Airlines around the world have struggled to break even amid the COVID-19 pandemic, and Taiwan's extremely restrictive border controls have further eroded domestic carriers' passenger revenue, but Starlux has stayed the course, according to Nieh.

Despite COVID-19, the airline has not laid off employees or cut pay, and has continued to spend money on introducing new planes and simulators, building its headquarters, and erecting maintenance hangars, Nieh said.

The carrier currently operates five Airbus A321neo planes and expects to take delivery of two more of the single-aisle aircraft by the end of this year and another seven in 2022, pending the progression of the pandemic.

StarLux has already pushed back delivery of the Airbus A330-900neo it arranged to lease and the A350 jets it has on order to the first quarter of next year and mid-2022, respectively, because of the global outbreak, according to the company.

Meanwhile, the CAA report showed China Airlines as the only Taiwanese carrier that has posted an after-tax net profit -- of nearly NT$1.56 billion -- during the first nine months of 2021, after making a net after-tax profit of NT$140 million in 2020.

According to China Airlines, it saw record monthly cargo revenue of over NT$10 billion in both August and September, offsetting extremely limited demand on the passenger side.

However, its two regional subsidiaries, Mandarin Airlines and Tigerair Taiwan, posted losses of NT$1.10 billion and NT$1.64 billion, respectively, during the nine-month period, CAA data showed.

China Airlines' main rival, EVA Airways, reported an after-tax net loss of NT$569.82 million between January and September, according to CAA data, after losing NT$3.36 billion in 2020.

EVA Airways said its plan to expand its cargo fleet will help improve its earnings, as air freight rates are expected to remain at high levels.

The carrier took delivery of two Boeing 777F cargo jets in October and November, with another set to join its fleet in December, after reaching a deal with Boeing last year to turn three of seven 787 passenger jets still to be delivered into freight models.

Regional carrier UNI Air, in which EVA Airways has a stake, reported an after-tax net loss of NT$416.89 million in the nine-month period, according to CAA data.

Source: Focus Taiwan News Channel