Print Preview : Swiss reports favourable results but a weaker fourth quarter for 2008

Swiss reports favourable results but a weaker fourth quarter for 2008
Swiss International Air Lines (Group) achieved earnings before interest and taxes (EBIT) of CHF 507 million for 2008, a 6.5% decline on the prior-year result. Total income from operating activities was increased 7.6% to CHF 5 267 million over the same period. SWISS was unable to maintain the revenue growth of the earlier months in the fourth quarter of the year, whose CHF 1 295 million operating income remained broadly in line with the CHF 1 305 million of October-to-December 2007.

Swiss generated total income from operating activities of CHF 5 267 million for 2008, a 7.6% increase on the CHF 4 895 million of the prior year. Despite the revenue growth, earnings before interest and taxes (EBIT) declined 6.5% from CHF 542 million to CHF 507 million in the face of record fuel prices for the first nine months of 2008 and unfavourable currency movements.

Swiss saw a clear weakening in demand for its services in the fourth quarter of 2008 - initially in the cargo sector, but also on the passenger front. Seat load factor declined accordingly; and, having shown a 10.6% improvement for the first nine months, operating income for the fourth-quarter period was slightly down on its prior-year level. Some relief was afforded by the substantially lower fuel prices seen from autumn 2008 onwards. But while EBIT for the fourth quarter was above its prior-year equivalent, this was largely because the 2007 fourth-quarter EBIT result had been reduced by provisions and revaluations of balance-sheet items.

"All in all, 2008 was a good year for SWISS: our company is profitable, achieved growth that was well above the market average and was able to continue the success of the last few years," says CEO Christoph Franz. "At the same time, though, the business developments in the last three months of the year have given us a taste of what we can expect in 2009. The 23.2% industrywide decline in cargo volumes that we saw in January of this year shows just how severe the current economic crisis is. And our passenger business is also feeling the effects of this more and more, especially in the business travel segment."

Swiss has been responding to the weakening markets since the beginning of the year by adjusting capacity in line with demand. These actions have included reducing frequencies on some routes or deploying smaller-capacity aircraft. The company also resolved a raft of measures at the end of February that includes reducing outstanding overtime and prior-year vacation amounts and facilitating the taking of unpaid leave.

"Swiss has been pursuing strict cost management for years now, and took action as early as last autumn to further improve cost structures," confirms Chief Financial Officer Marcel Klaus. "In times of crisis, cost efficiency is vital to maintaining market position."

"We want to remain profitable in times of crisis, too, to continue to invest in our fleet, our product and our route network," Christoph Franz emphasises. "Air transport is still a growth sector in the longer term. Market opportunities will arise again; and we aim to take full advantage of them, to strengthen and further expand Swiss's market position." Theodore Koumelis - Monday, March 16, 2009