Brent Hannon/TAIPEI

Taiwan's two largest carriers have reported a financially sound 1999. China Airlines (CAL) pulled out of the Asian downturn and posted a pre-tax profit after making a loss a year earlier, and rival EVA Air turned in healthy net earnings.

CAL's $91 million pre-tax profit compares with an $89 million pre-tax loss in 1998 - and comes as foreign carriers prepare bids for a stake in the flag carrier - while EVA's $37 million net result was significantly up on 1998's $2.3 million profit figure.

Lower interest rates and operating costs, with higher revenues in a resurgent market, more than offset the impact of rising fuel prices, suspension of services to the Philippines on 1 October and Taiwan's damaging September earthquake. CAL also lost a Boeing MD-11 in a crash in Hong Kong in August.

CAL's turnover improved by 18% last year, to $1.99 billion, with passenger volume up by 9.1% and passenger load factor up by three points, to 72%. Cargo volume, hit hardest during the slump, bounced back even more strongly, up by 20%. EVA's turnover rose by nearly 12% last year, to $1.56 billion, with cargo accounting for 44% of total revenue. EVA predicts an increase of nearly 9% this year, to $1.7 billion.

CAL's return to profitability comes as China Aviation Development Foundation prepares to sell up to half of its 71% stake in the carrier. CAL sources say a KLM/ Northwest Airlines partnership, UPS and a second US cargo carrier have been briefed on its operations ahead of a 22 February deadline.

• EVA subsidiary Evergreen Airways Services Macau has bought 2 million shares in Air Macau for $3.2 million from China National Aviation Corp Macau, giving it a 5% stake in the carrier. An existing relationship allows EVA passengers to through-ticket to mainland destinations, and permits cargo shipping between Taiwan and China. Unlike Hong Kong, Macau is visa-free for Taiwanese and, last year, about 800,000 Taiwanese travelled there, many going on to China.

Source: Flight International