CAL May Suffer Deficit This Year After Plane Crash

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Last updated at: (Beijing Time) Tuesday, May 28, 2002

CAL May Suffer Deficit This Year After Plane Crash

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Taiwan China Airlines (CAL) plane crash last week will inevitably increase the financial burden on the company and force it to re-evaluate its financial forecast of this year, according to news from Taipei Monday.

Market observers said the damage to company credibility, an anticipated increase in insurance premiums and a possible drop in revenues from passenger services will force the company to downgrade its financial forecast.

CAL share prices dropped Monday by the daily fall limit of 15.20 New Taiwan dollars (44 U.S. cents) per share and observers expected the share prices to drop further to below 13.5 New Taiwan dollars (39 U.S. cents).

CAL Vice President Chang Liang-shih said Monday CAL will negotiate in August with international reinsurance companies over the premium on the CAL fleet, as the insurance contract is due to expire at the end of September.

The observers said CAL's premium now might increase from the current 50 million U.S dollars to 70 million U.S dollars starting in the fourth quarter.

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