Swiss flies into the black for first time

Swiss has taken off financially for the first time ever Keystone

The national airline, Swiss, has reported a clear profit for the first time in its two-and-a-half year existence.

In the third quarter the carrier posted a profit from operating activities (Earnings Before Interest and Tax) of SFr20 million ($17 million).

Net profit was SFr16 million, compared with a net loss of SFr276 million for the same period last year.

Swiss had posted a technical second-quarter profit of SFr45 million, but that figure masked a real operational loss of SFr18 million, due to one-off income from settlement of a legal case.

The first-time profit comes despite a drop in revenue to SFr927 million for the three-month period, compared with SFr1.076 billion for the same period last year.

The third quarter of 2003 saw an operational loss of SFr62 million and a net loss of SFr276 million.

Below expectations

CEO Christoph Franz said the first-time profit “confirms our strategy” – to operate as a “network carrier with strong intercontinental services centred on its Zurich hub”.

However, he added: “The result for the – traditionally strongest – third quarter is, despite the operating profit, below our expectations.

“In addition to unachieved savings in maintenance, record high fuel price levels placed a burden of SFr35 million on our third-quarter results.

“Swiss is still in a position in which we must further significantly reduce our costs and consistently exploit all revenue earnings potential.”

For the full nine months of the year to date, Swiss posted an overall profit from operating activities of SFr1 million – which translates into a loss after tax of SFr17 million.

The equivalent figure for last year was a loss of SFr608 million after restructuring costs.

Fuel prices

But the profit was largely due to the one-off effect of the settlement of a legal case in the second quarter – the nine-month result would otherwise have been a loss of SFr67 million.

Swiss expects to incur additional costs of SFr140 million for full year 2004 due to higher fuel prices.

This cost over-run of one third will offset a considerable part of the gains achieved to date through restructuring activities.

While fuel usually accounts for between 12 and 14 per cent of total expenditure, it amounted to approximately 17 per cent of the company’s September operating expenses.

swissinfo with agencies

Key facts

Swiss carried seven million passengers and some 23,000 tonnes of cargo during the first nine months of 2004.
It operated 108,132 flights. The planes were on average 75.2 per cent full – a 3.6 per cent improvement on the same period last year.
The European network saw an increase to 62.1 per cent and intercontinental to 80.9 per cent.