Brent Hannon/TAIPEI

EVA Airways has been talking to oneworld and the Star Alliance and hopes to join one of the alliances as soon as it decides which is most suitable, says president and vice-chairman Frank Hsu. Meanwhile, the airline is boosting its cargo business to fill the void left by the downturn in Asian passenger traffic.

Speaking to Flight International, Hsu said that EVA "-would like to join the most global alliance. We don't want to be isolated. If you join an alliance you can reduce operational costs," he says.

EVA posted a first-half loss of $17 million and Hsu expects the airline's losses to have mounted to $29 million by the end of the year. Passenger traffic has declined because of safety worries and the Asian recession. Hsu says a recovery is unlikely within two or three years.

Instead, the airline will concentrate on its cargo business, which remains buoyant. Early next year EVA will have its three all-passenger Boeing MD-11s converted to freighters, and is finalising a deal for the modification work - with Boeing the most likely candidate. EVA already operates five dedicated MD-11Fs, and will take delivery of two more later this year, and two in 1999. These, together with the three conversions, will bring its total MD-11 cargo fleet to 12.

The four MD-11Fs represent the airline's only outstanding orders, following its recent decision to scrub a deal with Airbus for up to 12 A340-500s. The airline has long-term plans to replace its fleet of seven Boeing 767s with either the A340-500 or the 777-200X, but has told both manufacturers to postpone further discussions for at least two years.

Meanwhile, EVA is finalising separate joint cargo operations with Lufthansa and British Airways and is planning a new cargo flight to Dallas. Passenger flights to Jakarta have been cancelled, and frequencies have been reduced for flights elsewhere in the South-East Asia region.

The airline will also pursue a series of airline-related businesses to fill the profit void left by declining passenger traffic. EVA is set to bid on a second cargo terminal at the gateway Chiang Kai-shek Airport and has won permission to establish a second ground-handling company at the airport to compete with the current monopoly owned by China Airlines and the government.

"For an airline itself to make a profit is difficult at the moment, but side businesses like catering, maintenance, ground handling, and cargo warehousing, are probably more profitable," says Hsu. Current joint ventures Evergreen Sky Catering and EVA's maintenance venture with General Electric are making money, Hsu says. EVA has abandoned an effort to establish a wholly owned domestic airline in the Philippines.

Source: Flight International