(XFN-ASIA) - China Airlines (2610.TW) said its board of directors has elected Philip Wei as the company's new chairman following the resignation of Ringo Chao earlier this week. Wei had a previous stint as chairman of the island's largest airline between November 2005 and October 2007.
"I am coming back to work, not to have a good time," said Wei, who has worked for the company for more than 30 years. Wei, 65, said the global airline industry is going through an unprecedented difficult times, even worse than the aftermath of the Sept 11 terrorist attacks on the US in 2001 and the SARS epidemic in 2003. "We already incurred a loss of nearly 3 bln twd twd in the first quarter," he said. "And things had not improved in the second quarter."
In the first three months of the year, China Airlines reported a net loss of 2.97 bln twd, widening from a loss of 805.83 mln a year earlier. Wei said a turnaround in the second half hinges on subsequent movements in the price of crude oil. In the meantime, China Airlines will redouble efforts to boost revenue and bring down costs, he said.
"Our focus will be on operational improvement," he said. "We will pursue market expansion and enhance earnings from both cargo and passenger services." While there is still room for cost reductions, China Airlines is not planning layoffs or wage cuts, he said. The airline is reducing long-haul flights as they tend to be more vulnerable to higher fuel costs but short-range services will be expanded if warranted. Wei declined to go into more detail about the airline's turnaround plan as it is not expected to be completed until either the end of this month or early August.
The new chairman said he also needs some time to look at whether there is a need to modify the aircraft procurement program laid down by his predecessor. In January, China Airlines signed contracts with Airbus for the purchase of 14 A350-900 jets with an option for another six. In today's trade, China Airlines shares fell 0.05 twd to 11.75.