Swiss International Air Profits

Updated: 4th November 2009

 

 

 

 

 

 

 

Swiss Fly-by For Black-Ink Results

Swiss International Air Lines (Group) achieved an operating profit of CHF 113 million (£66.7 million) for the first nine months of 2009 (compared to a CHF 373 million (£220.2 million) operating profit for the same period last year). Total income from operating activities declined 18 per cent to CHF 3,236 million (£1,911 million).

SWISS also reported a black-ink result for the third quarter period, posting an operating profit of CHF 47 million (£27.8 million). The airfreight business of Swiss WorldCargo continued to show less-than-favourable trends in the third quarter, however, in the current business headwinds.

Pressure on yields increased in the third-quarter period, traditionally the strongest in business-volume terms. The smaller demand for premium-class seating and the corresponding increase in Economy Class business, along with continuing fare erosion, will only partially be reversed by any economic recovery. The lingering industry crisis has further accelerated these trends. Thanks to the actions it has taken, however, especially on the cost side, SWISS has so far kept the effects of the global economic crisis largely under control.

“If we compare ourselves with our competitors, SWISS has achieved a good result,” says chief executive officer Harry Hohmeister. “We’re continuing to work hard on our costs, we’re flexibly adjusting our capacities to changed and changing demand, and we continue to offer our customers an appealing air travel product. And, in contrast to the general industry trend, we also expect to post black-ink results for 2009 as a whole.”

SWISS consistently realigned its capacity to demand – especially on intercontinental services – throughout the first nine months of 2009, including cutting frequencies on a number of routes. Systemwide production for the January-to-September period was 5 per cent below that originally envisaged (and 4 per cent below its prior-year level), with a 3 per cent cut in Europe and a 7 per cent reduction on intercontinental routes.

“In the present continuing crisis, and in the substantially-intensified price wars it has triggered, strict cost management is crucial to our ability to continue to post a black-ink result,” says chief financial officer Marcel Klaus. “We have been well able to do so to date,” he continues. “The challenge now is to make steady further progress that will enable us to maintain and preferably further expand our present market position.”

Key figures from the income statement:

	1st - 3rd quarter		3rd quarter		Q1 - Q3
	2009	2009	2008	2008	2009 vs. 2008
Total income from operating activities*	3,236	3,961	1,118	1,410	-18%
Operating result*	113	373	47	119	-70%

*In accordance with the accounting policies of the Lufthansa Group and International Accounting Standards, SWISS adopted the fair value valuation method for its mileage bonus programme on 1 January 2009. The adoption of this method, replacing the previous marginal-cost method, reduces total operating income and the operating result for the first three quarters of 2008 by CHF 12 million and CHF 15 million respectively.

Traffic Figures

SWISS achieved a systemwide seat load factor of 79.2 per cent for the first nine months of 2009, a decline of 1.7 percentage points on the same period a year ago. The 81.6 per cent intercontinental seat load factor was 2.9 percentage points down on the prior-year period, while European seat load factor rose 1.3 percentage points to 74.5 per cent. SWISS carried 10.3 million passengers in the first nine months of 2009 (1.3 per cent up on the 10.1 million of the prior-year period) and operated 101,689 flights (compared to 100,227 in the same period last year).

The airfreight business of Swiss WorldCargo suffered a substantial decline in the first nine months of 2009 compared to the same period last year. Cargo load factor (by volume) amounted to 67.0 per cent, 13.3 percentage points down on the 80.3 per cent of the prior-year period.

For the third-quarter period, systemwide seat load factor amounted to 85.9 per cent, a one-percentage-point improvement on July-to-September 2008. European seat load factor rose 2.1 percentage points to 79.6 per cent, while intercontinental seat load factor increased 0.9 percentage points to 89.2 per cent. With capacity consistently tailored to changed and changing demand, available-seat-kilometre production for the period was 5 per cent below its prior-year level. Revenue-passenger-kilometre traffic volume suffered a smaller decline of 3.9 per cent.

	1st - 3rd quarter		3rd quarter		Q1 - Q3
	2009	2009	2008	2008	2009 vs. 2008
Seat load factor for European services	74.5%	73.2%	79.6%	77.5%	+ 1.3 points
Seat load factor for intercontinental services	81.6%	84.5%	89.2%	88.3%	- 2.9 points
Seat load factor systemwide	79.2%	80.9%	85.9%	84.9%	- 1.7 points

SWISS carried 3.74 million passengers in the third-quarter period, a 1.8 per cent increase on the 3.68 million of the prior-year period. Third-quarter cargo load factor (by volume) stood at 69.5 per cent, a 3.5-percentage-point decline.

Further Company News:

Product investments: Despite the present difficult economic environment, SWISS continues to pursue its comprehensive investment programme as planned, further strengthening its market position. Customers are evidently pleased with the new Airbus A330-300 cabin product in all three seating classes, as the first customer surveys have revealed. Business Class passengers particularly appreciate the comfort levels, the innovative seating arrangement and the advanced inflight entertainment system, and SWISS First travellers also give excellent marks to their new “suite above the clouds”. SWISS customers are already enjoying the new inflight comfort offered by the four A330-300s that have already entered service on the routes to New York (JFK), Dubai/Muscat, Mumbai and Delhi. The SWISS Airbus A340 long-haul fleet will also be reequipped with the new Business Class cabin by 2011.

Network news: SWISS plans to make further modifications to its capacities in the winter timetable period that are broadly of the scope seen in summer. European capacity will be cut by 1 per cent, while intercontinental capacity will see reductions of some 9 per cent, giving an overall systemwide reduction of 7 per cent compared to the originally published schedules (and a 5 per cent reduction on prior-year production levels). Two long-haul aircraft remain temporarily withdrawn.

With the corresponding demand showing signs of renewed growth, SWISS will increase capacity to New York and Boston again from the beginning of December. SWISS will further be introducing its first daily Bangkok services with the start of the winter schedules; and service to Berlin will also be increased from five to six daily flights. SWISS’s extensive 48-destination European flight programme is completed by Lyon and Oslo, which were both newly added in the summer schedules. SWISS will continue to invest in its product and fleet as planned, to maintain its competitive edge in the longer term.

New appointments to the SWISS Board of Directors:

Christoph Franz and Stefan Lauer joined the SWISS Board of Directors on 19 October. Both members of the Lufthansa Executive Board, they succeed Wolfgang Mayrhuber and Klaus Schlede. The SWISS Board of Directors continues to be chaired by Rolf Jetzer. Deputy Chairman Walter Bosch and long-serving Board member Jacques Aigrain also remain in office. With its new composition, the SWISS Board of Directors has set its course for the years ahead in personnel terms.

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