CORRECTED - CORRECTED-Flagship Taiwan airline could profit on China flights

(Corrects Philip Wei's title in paragraph 2 to chairman)

* Says return to profit this year possible, not certain

* Airline lost money this year through July, August better

* Demand high for China flights, 10 pct of business

By Ralph Jennings

TAIPEI, Aug 20 (Reuters) - Taiwan's flagship carrier China Airlines (2610.TW) said on Thursday it could return to profitability by the end of the year, beating forecasts, helped by strong demand for its recently added direct flights to China.

The airline with a fleet of 46 passenger planes and 20 cargo aircraft lost money through July and cannot be sure of a profit by the end but its Taiwan-China flights, 10 percent of business, have made money as the global economy shows signs of a rebound, company Chairman Philip Wei told Reuters in an interview.

"Flights between Taiwan and mainland China can help our overall performance," Wei said. "The worst of the global downturn has already passed, though the recovery speed is still pretty slow for both passengers and cargo."

China Airlines has seen a pickup this month as it looks forward to the Aug. 31 launch of 55 scheduled direct flights between Taiwan and China. It currently operates 22 flights on a charter basis.

"Things have improved in August but whether we make money this year overall is hard to predict," Wei said.

China claims sovereignty over self-ruled Taiwan and has threatened to take it by force, if necessary, but trade and transit ties have improved quickly since Beijing-friendly Taiwan President Ma Ying-jeou took office in May 2008.

The first regular direct cross-Strait flights began about a year ago. China and Taiwan agreed in April to allow a total of 270 flights per week, up from the current 108, for all eligible aircraft from Aug. 31. [ID:nSP424409]

Wei's outlook comes as airlines around the world have been cutting capacity and jobs to deal with a slump in business and holiday travel, fuelled by the global economic downturn and aggravated by the outbreak of H1N1 flu.

The International Air Transport Association forecast in June that global airlines could lose $9 billion this year, nearly double its previous estimate.

Analysts expected China Airlines to post a T$3.181 billion ($90 million) net loss for all of 2009, about 10 percent of its loss in 2008, according to Reuters Estimates. Analysts forecast a T$762 million profit for 2010, Thomson-Reuters data show.

China Airlines shares were down 1.3 percent on Thursday, underperforming the broad market .TWII, which ended 0.82 percent lower during the session.

(Editing by Lincoln Feast)