Taipei, A share buyback program unveiled by China Airlines (CAL), one of Taiwan's leading international carriers, failed to boost its share price on Friday, dealers said.
Investors remained concerned over a possible strike after pilots of (CAL) and EVA Airways, another major Taiwanese carrier, voted overwhelmingly earlier this week in favor of a strike over working hours and overseas pay issues, dealers said.
As of 1:05 p.m., shares of CAL had fallen 0.32 percent to NT$9.41 (US$0.31), off an early high of NT$9.53, with 15.72 million shares changing hands.
On the broader Taiwan Stock Exchange, the weighted index was down 0.39 percent at 10,984.81 points.
Soon after the local equity market opened, CAL shares moved higher in a knee-jerk reaction to the share buyback plan, but when the stock breached NT$9.50, selling set in, pushing the price into negative territory, dealers said.
"Investor sentiment remains haunted by a possible pilot strike," Hua Nan Securities analyst Henry Miao said. "Pilots are high-skilled professionals and if they strike, CAL will unlikely have any contingency plans."
He said that despite CAL's buyback program, investors remained on the sell side.
"The initial gains in CAL's share price today were for trading purposes only," Miao said. "The stock is unlikely to make any breakthrough as result of the share buyback program."
In a statement Thursday, CAL said it would launch a program Friday to buy back up to 50 million shares on the market at price of NT$9 to NT$14 until Oct. 9 in a bid to bolster investor confidence in the company.
The plan was announced after about 99 percent of the CAL pilots and 97 percent of the EVA Air pilots who participated in a poll Tuesday voted to strike, in the wake of unsuccessful negotiations with management.
Source: Focus Taiwan News Channel