Taiwan's leading air carrier, China Airlines (CAL) said it expects to post a net profit in the third quarter with sales to breach 80 billion dollars (2.35 billion US) in 2004.

CAL said Monday it also expects to register a net profit for the January-September period this year, company president Philip Wei told reporters.

"We managed net break-even in the January-August period," Wei said.

Pretax profit for August came in at 667 million dollars, the company said.

In the eight months to August, China Airlines posted a pretax loss of 264 million Taiwan dollars, an operating profit of 726 million on operating revenue 46.68 billion.

Tax credit allowed the company to break even at net level in the first eight months, despite booking a pretax loss.

Wei said the company could not make available immediately its earnings forecast for the full-year of 2003, but reiterated expectations that it will post a net profit.

"September is the peak season for cargo services ... and we have new aircraft," he said.

The expectations of net profit this year are based on a presumption that there will be no SARS (Severe Acute Respiratory Syndrome) outbreak in the second half or the impact on the company will be minimal, if any.

The SARS' impact on the industry in the future, if any, should be less when compared with the second quarter as the industry has learned from the experience, Wei said.

Late last year, the company set a target of 2.4 billion for its 2003 pretax profit, but SARS and higher oil prices, among other factors, are likely to dampen any hopes of meeting the goal.

"We are optimistic about generating profit this year, but the level is likely to be lower than the target," another company official said.

However, "our parent sales next year are seen rising 13-15 percent year-on-year," company vice president John Chang said, pointing to a capacity increase of 10 percent.

The company has purchased new aircraft to expand its fleet and phased out some old ones.

"Our fleet accordingly will grow to 62 by 2007" from the current 57, company senior vice president James Chang said.

Wei said such an expansion will allow company annual sales to challenge 100 billion by 2007.

"We plan to spend around 130 billion Taiwan dollars to buy 26 aircraft during 2003-2007," John Chang said.

While Taiwan has given its approval for local airlines to launch indirect air charter cargo services across the straits, China Airlines will apply for such rights only after Beijing also gives the green light.

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