SWISS doubles its first-half operating profit in 2011

Swiss International Air Lines (Group) reports an operating profit of CHF 129 million for the first six months of 2011. The result is more than double the CHF 61 million operating profit recorded for the first half of last year. Total income from operating activities for January-to-June 2011 amounted to CHF 2.406 billion, a 7% increase on the prior-year period. The second quarter saw a particularly strong improvement on the same three months of 2010, whose results had been depressed through the airspace closures prompted by the volcanic ash cloud and the corresponding revenue losses. The second quarter of 2011 produced an operating profit of CHF 113 million (2010: CHF 71 million). The airfreight business of Swiss WorldCargo showed stable first-half developments.

“Given the difficult market environment, we can be satisfied with these first-half results,” says CEO Harry Hohmeister. “At the same time, though, the challenges continue to grow.” Increased demand, especially on intercontinental routes, largely offset the adverse effects of high fuel prices and a strong Swiss franc. First-half business was additionally burdened by the political unrest in North Africa and the Middle East and the repercussions of the earthquake in Japan. “We are continuing to systematically reappraise and further improve our processes and our cost positions in all areas of our organisation to ensure that, despite the present tough conditions, we can match last year’s favourable operating result,” Hohmeister continues. “And, parallel to this, we are further pursuing all our endeavours to enhance our products and services for our customers.”

SWISS does not expect its yields to recover substantially any time soon, and currency and raw materials price trends are also likely to be negative for the foreseeable future. “The strength of the Swiss franc is putting us at a firm disadvantage,” confirms CFO Marcel Klaus. “So as well as maintaining our advantageous cost structures, we will need to continue to show extensive flexibility, variability and responsiveness. An awareness of these factors is already strongly anchored in our company,” he continues. “And we cannot afford to lose that: it’s a vital factor in our success.”

Traffic figures
SWISS carried 7.37 million passengers in the first six months of 2011, a substantial 10.9% improvement on the 6.64 million of the prior-year period. The strong passenger growth recorded is due partly to the flight cancellations that were incurred in the first half of 2010 as a result of the volcanic ash cloud. But SWISS has reported year-on-year increases in its passenger numbers for every month of 2011 to date.

Systemwide seat load factor for the first-half period remained broadly stable at 79.6%, a mere 0.5 percentage points below its equivalent for 2010. SWISS performed 74 613 flights in the first six months of 2011, 8.4% more than in the prior-year period (2010: 68 833 flights).

Intercontinental traffic volumes for the first half of 2011 were a 10.5% improvement on the prior-year period in revenue passenger-kilometre (RPK) terms, achieved on available seat-kilometre (ASK) capacity that was increased by 12.3%. Seat load factor for intercontinental services showed a corresponding slight decline, from the 85.0% of 2010 to 83.7%. First-half ASK capacity on European services was 11.4% higher than in 2010. With European RPK traffic volumes registering a 13.1% increase on the prior-year period, seat load factor for European services rose 1.1 percentage points to 71.9% (2010: 70.8%). The airfreight business of Swiss WorldCargo posted an 8.4% increase in its first-half traffic in cargo tonne-kilometre terms. Cargo load factor (by volume) for the period amounted to 79.3% (2010: 81.8%).

Personnel
SWISS remains a key generator of business and jobs, offering young people who are fascinated by flying the chance to pursue their career in the air transport sector. The company expects to recruit another 200 new cabin personnel in 2011, along with 100 future pilots. At the end of June 2011 SWISS had a worldwide workforce (in full-time-equivalent terms) of 6 286 personnel, compared to 6 113 a year before. The positions were shared among 7 572 employees (against 7 496 at the end of June 2010).

Further company news
Fleet and product investments: SWISS took delivery of its tenth new long-haul Airbus A330-300 in January 2011. The SWISS fleet was further expanded in March with the arrival of another new Airbus A320, its 22nd. From this September onwards, the entire SWISS intercontinental fleet will feature the carrier’s new Business Class. SWISS will also be the only European airline to offer a three-class cabin product (including First Class) on all its long-haul routes.

Awards and distinctions: SWISS’s firm focus on its customers and their wishes and needs was further confirmed in January when the carrier was named “Best Airline for Europe” and “Best Airline for North & South America” in the 2011 Business Traveller Awards. A further key distinction followed in June when SWISS was voted “Best Airline – Western Europe” in this year’s Skytrax World Airline Awards, following a poll of several million air travellers by the UK-based consultancy.

High punctuality: Some 84.9% of all SWISS flights left within the permitted 15 minutes of their scheduled time of departure in the first six months of the year. Once again, this was a very high level of punctuality for a network carrier.

Network news: Services from and to Basel were substantially expanded at the end of March, in partnership with bmi. The new services include three daily flights to London (Heathrow). SWISS has also added Rome and Copenhagen to its Basel-based network, and has increased frequencies on its Basel-Hamburg and Basel-Barcelona routes.

SWISS also raised its frequencies from six-times-weekly to a daily service pattern on the Zurich-San Francisco and Zurich-Shanghai routes with the start of the 2011 summer schedules. So with the exception of two points in East Africa and Cameroon, SWISS now offers at least daily service to and from all its intercontinental destinations.

Environmental care: SWISS has reduced its specific fuel consumption (i.e. its fuel consumption per 100 passenger-kilometres or pkm) by over 17% since its foundation in 2002. The carrier reduced its specific fuel burn by around 3.9% from its prior-year level in 2010 alone, from 3.88 to 3.73 litres per 100 pkm. This further enhancement of its environmental credentials is due in no small part to the billions of francs that the company has invested – and continues to invest – in maintaining an advanced and efficient aircraft fleet.