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Swiss backtracks on CEO’s financial forecast

What I actually meant to say was… Keystone Archive

Switzerland's national airline, Swiss, has gone into reverse gear on an apparent full-year results forecast by its new CEO, saying the comments were misinterpreted.

This content was published on November 8, 2004 - 17:43

The carrier issued a clarifying statement on Monday – just two days after it confirmed comments by the chief executive, Christoph Franz.

In an interview with the “Rundschau” magazine of Swiss pilots’ union Aeropers, Franz said the airline should improve this year’s operating result by some SFr300 to SFr400 million.

On Saturday, a Swiss spokeswoman confirmed the remarks and said the figures compared with a SFr498 million operating loss in 2003.

On that basis, Swiss would be set for a full-year operating loss of up to SFr200 million – of which Franz indicated that more than SFr100 million would be down to higher oil costs.

The interview was published nearly three months after Swiss posted its first quarterly net profit and shortly before its third-quarter results, which are due on November 16.

However, the latest statement by Swiss stresses that Franz had not intended to give any concrete indication of full-year results.

No bottom line

It reads in part: “These comments were intended to make clear to Swiss staff that, while the current results-enhancement programmes have been successful, further measures are required to achieve the turnaround.

“Christoph Franz’s comments do not in themselves offer any concrete indication of business results for the current year, since these remain influenced by further important cost and revenue factors.”

The statement said Swiss was “abiding by its policy” of not issuing any forecasts of bottom-line results for the current business year, and would not comment further on the issue.

Switzerland’s SWX stock exchange opened a preliminary investigation on Monday, to determine whether Franz’s comments constituted a violation of its disclosure rules.

The airline was fined SFr10,000 in September, after it failed to disclose third-quarter results immediately after they were leaked to a Sunday newspaper.

Earlier this year, Swiss sold fuel hedges – financial instruments to protect against unexpected price rises – to boost much-needed short-term liquidity.

It then raised ticket prices in the wake of surging oil prices, but Franz said the fuel surcharge covered at best one third of the extra costs.

Swiss aims to complete its turnaround next year, despite warning in June that it would miss its initial target of breaking even at the operating profit level this year.

However, analysts say it is still too large for its domestic market and lacks a clear strategy.

swissinfo with agencies

Key facts

Swiss reported an operating loss of SFr498 million last year and issued a further profit warning in June, after initial forecasts that it would break even.
It posted its first quarterly net profit in August, but a one-off gain masked further operating losses.
Last month, Swiss secured an international credit facility of SFr325 million.

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In brief

Swiss says CEO Franz did not mean to give a concrete indication of full-year results in an interview last week.

It confirms the gist of Franz’s comments, but says they were not intended as a forward-looking statement.

The Swiss stock exchange has launched a preliminary investigation to determine whether Franz violated its disclosure rules.

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