Swiss finds the black in second quarter
Dateline: Wednesday August 18, 2004
Boosted by a one-time gain of Sfr68 million ($54.6 million) (ATWOnline, Aug. 5), Swiss International Air Lines reported a Sfr45 million net profit for the second quarter ended June 30, greatly improved versus a Sfr133 million net loss in the 2003 second quarter.
"The ongoing corporate restructuring proceeded according to plan in many areas in the first half of the year," the airline said. "But Swiss's turnaround is being negatively influenced by insufficient reductions in aircraft maintenance costs and by the unexpectedly high price of aviation fuel."
As a result of operating a substantially smaller route network, total income from operating activities fell 10.7% to Sfr922 million but total operating expenses also declined, dropping 26% to Sfr872 million. This produced an operating income of Sfr50 million for the quarter compared to an operating loss of Sfr132 million in the year-ago period. Excluding the one-time gain, however, Swiss would have posted an Sfr18 million operating loss.
For the six months ended June 30, the airline recorded a net loss of Sfr33 million compared to a Sfr333 million net loss in the prior-year period. Total income from operating activities dropped 15.7% to Sfr1.77 billion while operating expenses decreased 26.9% to Sfr1.79 billion. This resulted in an operating loss of Sfr19 million, significantly improved versus an operating loss of Sfr346 million in the first six months of 2003.
Swiss said it likely will miss its breakeven target on an operating level this year. The carrier is evaluating all of its routes, particularly in Europe, operated from Basel, Geneva and its hub in Zurich.
Christoph Franz, who took over as CEO on July 1, said Swiss plans to cut its marketing and services divisions and integrate them into its sales and operations units. Analysts had speculated the carrier might use Tuesday's results and Franz's first official appearance as CEO to outline measures such as route closures or job and pay reductions, but no such announcements were made.--Loren Farrar and Kurt Hofmann