Swiss International Air Lines (Group) reports an operating profit of CHF 65 million (AED 244 mn) for the first half of 2009, compared to CHF 254 million (AED875 mn) for the same period last year. Total income from operating activities for the period declined 17% to CHF 2 118 million (AED7 299 mn).
The global economic climate and the corresponding falls in demand, especially in the premium segment, depressed yields more severely in the second-quarter period than they had at the start of the year. Despite taking early action on the cost front and realigning capacity to the new demand levels, SWISS was only partly able to offset the revenue declines. The situation was further exacerbated by an increase of some 50% in crude oil prices since the beginning of the year.
The present weakness of the Swiss home market and the drift away from the premium segment towards Economy Class travel were both reflected in SWISS’s revenue results. The airfreight business of Swiss WorldCargo also continued its unfavourable development in response to general economic conditions. Overall, SWISS posted a slim operating profit of CHF 3 million (AED 10.34 mn) for the second-quarter period.
“Although we have been practising rigorous cost management and flexibly adapting our capacity in response to the recent downturn in demand, SWISS cannot escape the present storms in the airline sector, and this is reflected in the broadly breakeven operating result that we achieved for the second-quarter period,” says Chief Executive Officer Harry Hohmeister, commenting on this performance. “Our overall results for the first six months of 2009 are largely in line with our expectations,” he continues. “And we will continue to pursue our goal of posting a black-ink bottom-line result even in challenging business times.”
SWISS modified its capacity in the light of declining demand in the first-half period, especially on its intercontinental routes. This has largely entailed reducing certain frequencies while still maintaining non-stop service to the destinations concerned.
Elsewhere, SWISS has been taking advantage of market opportunities: Lyon and Oslo have been added to the network in the summer schedules. SWISS customers continue to enjoy an extensive and attractive route and service network. “We are actively exploiting market opportunities,” Hohmeister explains. “As soon as the economic recovery begins, we aim to use our strong position to gain a full share in the resulting growth. For the present, though, we have a rocky road ahead.”
SWISS is keeping to its current investment programme, to ensure its long-term viability and further enhance its competitive credentials. The airline has already integrated two new Airbus A330-300s into its fleet this year, and two more of the twinjets will join them in the next few weeks.
“When it comes to responding to the present economic crisis, we can make extensive use of the experience we accumulated in our recent corporate turnaround,” adds Chief Financial Officer Marcel Klaus. “We are constantly optimising our cost structures: to counter the persistent pricing pressure on the revenue front, we are taking various actions to further reduce our costs.”
Key figures from the income statement
1st + 2nd quarter 2nd quarter 1st + 2nd quarter
in CHF million 2009 2008 2009 2008 2009 vs. 2008
Total income from operating activities* 2 118 2 551 1 038 1 383 -17%
Operating result* 65 254 3 188 -74%
SWISS achieved a systemwide seat load factor of 75.9% for the first six months of 2009, a decline of 2.9 percentage points on the same period a year ago. SWISS’s seat load factors remain above the industry average. First-half European seat load factor remained stable at 71.7% (2008: 70.9%), but the 77.9% intercontinental seat load factor was a 4.6-percentage-point decline on the 82.5% of the prior-year period. SWISS carried a total of 6.51 million passengers in the first six months of the year (2008: 6.49 million) and operated 66 752 flights, a 1.5% increase on the 65 774 of January-to-June 2008.
The first-half cargo load factor (by volume) of Swiss WorldCargo amounted to 65.4%, a decline of 18.6 percentage points on the same period last year
SWISS transported 3.56 million customers in the second-quarter period, 3.3% more than the 3.45 million of the prior-year period. With capacity realigned to reduced demand, total production (in available seat-kilometres) was 0.8% lower than for the second quarter of 2008. Total traffic volume (in revenue passenger-kilometres) was 3.4% down on its prior-year level.
. 1st + 2nd quarter 2nd quarter 1st + 2nd quarter
2009 2008 2009 2008 2009 vs. 2008
Seat load factor for European services 71.7% 70.9% 77.2% 73.8% + 0.8 points
Seat load factor for intercontinental services 77.9% 82.5% 79.2% 83.9% - 4.6 points
Seat load factor systemwide 75.9% 78.8% 78.5% 80.6% - 2.9 points
