Swiss International Air Lines Ltd.
Phone: +41 (0)848 773 773
Fax: +41 (0)61 582 3554
SWISS further improved its operating performance in the third quarter of 2005 in a difficult market environment. The company’s flights posted very high load factors in what is traditionally the strongest quarter in traffic terms. High fuel prices and persistent fare erosion continue to substantially hinder the current turnaround process. With losses still being sustained, the present restructuring programme must continue to be consistently pursued.
SWISS customers are deriving increasing benefit from SWISS’s close collaboration with Lufthansa. Parallel to this, the punctuality of flight operations at SWISS’s Zurich Airport hub has also been substantially improved.
SWISS increased its total income from operating activities to CHF 2 767 million for the first nine months of 2005 (prior-year period: CHF 2 695 million) and reported earnings before interest and taxes (EBIT) before restructuring costs of CHF 24 million (prior year: CHF 1 million). Fuel prices, which remain at record levels, had a significant adverse impact on the EBIT result. As a result of currency exchange-related value adjustments on US dollar liabilities and restructuring costs, SWISS reports a substantially higher net loss of CHF 81 million for the period (prior-year period: CHF 17 million).
EBIT before restructuring costs for the third-quarter period – traditionally the strongest in traffic terms – totalled CHF 33 million (prior-year quarter: CHF 20 million). Net profit for the period amounted to CHF 8 million (prior-year quarter: CHF 16 million). As in 2004, results are expected to weaken again for the fourth quarter in view of the traditionally lower seasonal demand in the autumn and winter months. SWISS expects to poste a significant net loss in the fourth quarter 2005.
“In posting a positive operating result for the third quarter of 2005, SWISS has confirmed the progress it has made in its turnaround process,” says President and Chief Executive Officer Christoph Franz, “especially since this EBIT improvement was achieved in an extremely demanding competitive environment and against fuel prices that had climbed to record levels. At the same time, the fact that we continue to report a loss underlines that we must continue to consistently pursue our restructuring and our ongoing Collective Labour Agreement negotiations with our flying personnel.”
Restructuring programme to be further pursued
SWISS is continuing to implement the measures announced in January 2005 to provide the company with a sustainable competitive position. These actions are designed to achieve sufficient profitability to permit investment and future growth.
SWISS has substantially reduced its costs compared to those of 2004, but its cost position remains too high. Excluding the additional costs incurred through jet fuel prices, SWISS’s cost per available seat kilometre (CASK) for the first nine months of 2005 was 3.6% below its prior-year equivalent. But with fuel prices at record levels, overall CASK for the first nine months of 2005 was 4.1% up on the same period last year.
SWISS has reduced its fleet by eleven aircraft since the beginning of 2005. Despite these actions, however, the company continues to offer its customers an attractive range of air services and connections, through its collaborations with various partner airlines, and with the Lufthansa Group in particular.
More passengers, rising load factors and improved punctuality
SWISS carried around 7.33 million passengers in the first nine months of 2005, a year-on-year increase of 4.6%. The encouraging traffic trends produced a systemwide seat load factor of 79.1% for the period (prior-year period: 75.2%). Third-quarter seat load factor was particularly high at 83.2% (prior-year quarter: 78.6%).
Parallel to these developments, SWISS substantially improved the punctuality of its flight operations in the first nine months of 2005. The company was placed a highly encouraging sixth in September’s punctuality rankings of European airlines, an impressive improvement on the 24th place it had occupied back in January. Thus, in addition to its product enhancements, SWISS has tangibly improved the quality of its services on the operational front.
Customers feel the benefits of SWISS’s Lufthansa integration
Tangible customer benefits have always been centrestage in SWISS’s growing collaboration with Lufthansa. Those benefits were further extended from the start of the 2005/06 winter schedules on October 30 with the harmonisation and expansion of services between Switzerland and Germany. SWISS customers can now choose from a total of 563 weekly connections between the two countries spread conveniently throughout the day – 241 more than in the 2005 summer schedules. SWISS was also able to announce at the beginning of October that the Swiss TravelClub will be amalgamated into Miles & More, Europe’s leading frequent flyer programme, on April 1, 2006.
The full nine-month report will be published at 07:30 am. It will also be available online at the SWISS website.under “About SWISS > Investor Relations”.