Profit plunges at SAirGroup
The SAirGroup, the parent company of national carrier Swissair, announced on Tuesday that its net profit for the first half plunged to SFr3 million ($1.73 million), compared to SFr87 million during the same period last year.
However, in a statement from its headquarters in Zurich, the group forecast that it would end the year in profit.
SAirGroup blamed the profit fall on a "massive rise" in fuel prices and negative currency influences. It said the group's airline-related activities could only partially offset the high costs in the air transport sector.
"If fuel prices stay at current levels, the airline result will remain negative in spite of increased capacity and rising production," said Philippe Bruggisser, SAirGroup chief executive.
"But overall the group will achieve a profit this year, albeit below that in 1999, based on the success we have with our airline-related activities and because we'll firm up our market position around the world, consolidating our planned acquisitions in the process," he added.
SAirGroup chief financial officer, Georges Schorderet, said last month that he expected the group to post a net profit of SFr200 million this year, compared to SFr273 million last year.
The SAirGroup statement said the rise in fuel prices had cost it an extra SFr170 million in the first six months, while delays at its Zurich home base had a negative impact of SFr50 million on the result.
The group's SAirLines division - which includes Swissair, Crossair and Balair - made an operating loss of SFr155 million in the first half after showing a profit of SFr84 million in the same period last year.
Other airline-related divisions, including flight retail, catering and hotels, all reported operating profits.
The statement added that the merger of the group's airline holdings in France (AOM, Air Littoral and Air Liberté) and attempts to generate a strong market position for its German LTU travel affiliate would require more "management capacity and financial resources".
The statement said provisions had already been created to address these requirements, but it did not elaborate.
The French airlines made losses of nearly SFr200 million last year. Earlier this month, the head of Belgium's Sabena, Paul Reutlinger, took over to lead the merger "to a viable and profitable airline".
In a related development, the SAirGroup said it had found a partner for the holiday and tourism company LTU. From January 1, the Rewe Touristik company of Cologne will buy LTU Touristik outright, while taking a 40 per cent stake in the LTU airline, in which the SAirGroup holds a 49.9 per cent interest.
A separate statement said the strategic merger meant there would be a second strong player in Germany's vast tourism market and achieved the goal of binding the LTU group to a comprehensive tourism concept, ensuring long-term capacity for the LTU airline.
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