Wednesday, 22 August 2007

Tough times ahead for China Airlines

China Airlines are preparing themselves for turbulent times ahead following the latest incident in Japan where a Boeing 737-800 burst into flames shortly after landing at Okinawa.

Johnson Sun China Airlines spokesman has said that their cash flow will be seriously affected despite having other aircraft to carry on their operations.

Sales in flight bookings with the airline will also drop until public faith has been restored. Sun also said that total losses from the accident had not yet been established.

A Boeing 737-800 jet is normally worth $70-$80 million but it’s not known how much China Airlines paid for the aircraft or how much compensation the insurance companies will pay out.

"Although TFMI is the lead underwriter, its exposure is limited," Taiwan Ratings said in a statement. "The expected net loss is equivalent to 1 percent to 2 percent of the insurer's total shareholders' funds plus special reserves at the end of June," it said.

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