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TransAsia Airways shares extend losses, but downturn capped

TransAsia Airways shares extend losses, but downturn capped

Taipei, Feb. 5 (CNA) Shares of TransAsia Airways (????), a mid-sized international carrier based in Taiwan, extended losses Thursday morning from a session earlier after one of its planes crashed into the Keelung River in Taipei's Nangang District Wednesday morning shortly after taking off, killing at least 32, dealers said. However, the losses were limited as bargain hunters emerged to take advantage of its latest heavy downturn as they witnessed a plunge in international crude oil prices overnight, which could further lower airline companies' operating costs, the dealers said. As of 11:06 a.m., shares of TransAsia had lost 3.29 percent to NT$11.75 (US$0.37), off an early low of NT$11.30, with 24.74 million shares changing hands. The transportation sector was up 1.23 percent at 93.05 points on the back of falling international crude oil prices, while the weighted index on the Taiwan Stock Exchange was down 0.32 percent at 9,483.15 points. After a 7 percent fall, the maximum daily decline, a day earlier, the stock opened down an additional 7 percent as investors remained shocked by the latest crash, but the losses were partly recovered since the gains posted by the entire transportation sector lent some support. "The market has a lot of bargain hunters who wanted to buy TransAsia shares for trading purposes, betting that the stock would stage a technical rebound soon," Hua Nan Securities analyst Henry Miao said. "The weakness in international crude oil prices gave these bargain hunters some hints to buy." Crude oil prices plunged 8.7 percent overnight, stopping a four-day gaining streak after data showed that U.S. crude supplies had climbed to the highest level in some 80 years. Fuel costs account for about 40 percent of airlines' operating costs, so the dive in crude oil prices could further strengthen carriers' bottom lines. As a result, shares of China Airlines (CAL, ??) added 2.03 percent to NT$15.10, and EVA Airways (????) gained 0.87 percent to NT$23.15. "Despite the bargain hunting, I do not suggest that investors rush to pick up TransAsia shares for the moment as it remains to be seen how the crash will affect the carrier's operations and profitability, in particular about possible compensation payouts," Miao said. Before Wednesday's crash, the market had estimated that TransAsia will post NT$1-NT$1.3 in earnings per share (EPS) for 2015, up from an estimated NT$0.7 for 2014. Miao said that after the crash, it is hard to speculate about the carrier's bottom line now. Miao said that as a mid-sized carrier, TransAsia seemed to expand its operations at a quicker-than-expected pace, which has raised concerns over whether the carrier will handle its expansion plan well. In December, V Air, a budget carrier owned by TransAsia, launched operations, eager to grasp a share in the booming regional low-cost airline business by flying to popular destinations such as Bangkok. In addition, TransAsia announced at the end of last year that it will spend US$480 million to buy four A330-800s to extend its reach to mid- and long-haul routes. "I still prefer transportation stocks, like CAL and EVA Air, due to their relatively large capital size," Miao said. "I do not expect that the impact resulting from the TransAsia crash will fade any time soon." (By Wei Shu and Frances Huang)


Updated : 2021-09-23 08:26 GMT+08:00