Swiss International Air Lines (SWISS) generated total income from operating activities of CHF 1,194 million for the first three months of 2015, a slight 0.2% increase on the CHF 1,192 million of the same period last year. Despite the strength of the Swiss franc and still-intense market competition, the company achieved earnings before interest and taxes (EBIT) for the quarter of CHF 51 million, a substantial improvement on the prior-year period, which had produced an EBIT of CHF ‑1 million. SWISS made further progress in April, securing new collective labour agreements with its IPG and AEROPERS pilots’ staff associations and with the vast majority of its cabin crew corps.
Swiss International Air Lines (SWISS) generated total income from operating activities of CHF 1,194 million for the first three months of 2015, a 0.2% increase on the CHF 1,192 million of the same period last year. The Swiss National Bank’s abandonment of its minimum euro exchange rate and the still-tough competition both had a tangibly negative impact on business development for the quarter. The strong Swiss franc and the continuing competitive pressures depressed revenues, especially in the Swiss home market, but elsewhere within Europe, too. Revenues on intercontinental routes, by contrast, showed positive trends, despite the adverse currency movements.
SWISS’s various initiatives under the Lufthansa Group’s SCORE results enhancement programme also had a positive effect. Of the 320 actions now taken on both the cost and the revenue side, a total of 148 had been concluded by the end of the first-quarter period. The main SCORE measures still ongoing include actions on the fuel management front and efforts to raise Geneva market share. First-quarter earnings before interest and taxes (EBIT) amounted to CHF 51 million – a significant year-on-year improvement that is attributable largely to consistent capacity management, the resulting high load factors systemwide and favourable fuel cost trends.
“Our 2015 first-quarter results are encouraging,” says CEO Harry Hohmeister. “It’s still tough to earn our revenues; but we’re responding to the challenge with constant drives to raise our efficiency and lower our costs. At the same time, we’re also adopting a more customer-minded fare concept for Europe; we’re adding numerous attractive new destinations to our network; and we’re remaining as innovative as possible for our customers.”
Stable loadings and passenger numbers
A total of 3.532 million customers flew SWISS in the first three months of 2015, a slight 0.2% increase on the prior-year period (Q1 2014: 3.525 million). The airline also operated 2.9% fewer flights: 33,339, compared to 34,321 in the first quarter of 2014. Systemwide seat load factor for the quarter remained broadly stable at 78.9% (Q1 2014: 78.8%).
SWISS offered 2.0% more capacity systemwide in the first three months of 2015 than it had a year before in available seat-kilometre (ASK) terms. Total traffic volume, measured in revenue passenger-kilometres (RPKs), was raised 2.1%.
Total cargo sales for the period were up 1.7% year-on-year, while the first-quarter cargo load factor (by volume) of 79.3% was a 1.5-percentage-point decline on the 80.8% of January-to-March 2014.
Attractive new destinations and a new and more customer-minded fare concept
SWISS had already taken various actions under its “Next-Generation Airline of Switzerland” strategy by March 2015. These include substantially expanding the range of destinations served from Zurich: 22 attractive new points in Europe were added to the Zurich-based network in the present summer schedules. Geneva has also seen the addition of 12 new destinations.
SWISS will further be adopting a radical new fare concept for its European services from this summer onwards. The new concept, which will apply on all European routes from Zurich and Geneva, is specifically tailored to travellers’ needs today.
The four fare options – “Light”, “Classic”, “Flex” and “Business” – offer both more choice and greater transparency. Customers can now select the fare that best meets their particular needs for a particular flight, and thereby pay for only the services that they really wish to use.
The four fare options are basically always available, and the services offered within each of them are clear and easy to see. The fares are also available for one-way flights. All four options include the price of the flight, one item of carry-on baggage, a snack and drinks on board, a fixed seat assignment when checking in within 23 hours of departure and award and status miles.
New collective labour agreements concluded for cabin and cockpit personnel
As a further element in its “Next-Generation Airline of Switzerland” strategy, SWISS has concluded new collective labour agreements (CLAs) with its IPG and AEROPERS pilots’ staff associations and with kapers, the staff association of its cabin personnel. The new CLAs should both safeguard jobs in the longer term and provide the company with a competitive foundation for its future growth. The members of the IPG and AEROPERS approved their new CLA last month, as did the large majority of the company’s cabin personnel.
Outlook
SWISS expects to report stable results trends and an EBIT that is slightly above its prior-year level for 2015 as a whole. The strong Swiss franc will impact negatively on business and revenues; but with oil prices still low, fuel cost trends will have a beneficial effect on bottom-line results.
