Expanding sales of low-frills budget tickets by the national airline, Swiss, have been partially blamed for a SFr613 million ($463 million) loss in the nine months to September.This content was published on November 17, 2003 - 21:19
Swiss recently lowered its fares on dozens of European routes in an effort to revitalise the carrier's survival chances.
Although the new fares have boosted passenger numbers since being introduced in autumn, the airline's revenue per seat fell more than 10.7 per cent in the third quarter compared to the same period last year.
The company’s third-quarter loss amounted to SFr276 million, coming on top of losses of SFr147 million in the second quarter and SFr199 million in the first quarter.
On average, the company has lost around SFr2.2 million per day this year.
The latest figures are further evidence that the carrier is struggling to find its feet after launching last year following the aftermath of the 2001 Swissair collapse.
However, Swiss said a SFr205 million bill for restructuring costs had accentuated the third-quarter loss.
It said its negative operating loss of SFr62 million was far lower than for the second and first quarters.
"These results conform to our business plan," chief executive André Dosé said on Monday.
The carrier has been actively slashing staff and aircraft by a third in the last few months.
Oliver Sutton, an aviation expert with the Geneva-based “Interavia” magazine, said Swiss was heading in the right direction, despite tough competition from low-cost carriers.
“The question really is whether the cost-cutting exercise they’ve put in place is going to be sufficient,” Sutton told swissinfo.
“It probably will be if traffic continues to recover, but the last quarter is traditionally a difficult time for the airlines,” he said.
Sutton said the Swiss results stood in stark contrast to its low-cost rival easyjet, which has just released its full-year results (which run to the end of September).
“They’ve made a whole year profit of £96 million (SFr215 million), and the first-half of the easyjet year was extremely tough.
“Swiss have a tremendous challenge on their plate to equal that.”
The ongoing losses continue to undermine the company’s push to negotiate fresh lines of bank credit.
Swiss is understood to require several hundred million francs in new capital to avoid a cash crisis in the coming year.
"Negotiations are continuing with two big Swiss banks, as well as with other international banking establishments," Dosé said.
At a press conference in September, Dosé gave strong hints that a credit deal was just around the corner.
However, banks have appeared reluctant to invest fresh capital in the airline, which is battling a dramatic downturn in the aviation industry.
Swiss has said it hopes to break even next year, before making a profit in 2005.
News of the third-quarter loss was leaked to the Sunday newspaper, the “SonntagsZeitung”, triggering a sell-off of the airline’s shares.
The Zurich-based paper said the cheap fares strategy had led to "massive falls" in revenue on its European network.
On Monday morning shares in the carrier fell by around 20 per cent, before recovering to end the day down 11.2 per cent at SFr11.45.
The leaking of sensitive financial data is likely to annoy the Swiss stock market, which earlier this month sanctioned the carrier for breaching exchange rules about the timing of a public announcement in February.
Although only a few of the carrier’s shares are actively traded on the stock market, opportunities for quick profits remain.
Swiss shares have lost around 40 per cent since the beginning of the year, however, they have surged several times, typically after the publication of stories about the company’s future in the Sunday press.
swissinfo, Jacob Greber in Zurich
Third quarter key figures:
Swiss reported an operating loss of SFr62 million.
The company lost SFr267 million after restructuring costs of SFr205 million.
A first-quarter loss of SFr199 and a second-quarter loss of SFr147 million leave Swiss with a loss of SFr613 for the first nine months of the year.
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