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Published on : Tuesday, May 3, 2016
SWISS’s total operating income for the first quarter of 2016 was tangibly influenced by the strength of the Swiss franc against other currencies. Some of this adverse currency impact could be offset by hedging arrangements. But the currency hedging result for the quarter was far less favourable than it had been in the prior-year period. Operating income was further reduced through weaker demand in the prime Swiss market.
Total first-quarter income from operating activities declined 7% to CHF 1,071 million . Adjusted EBIT for the period was down 56% at CHF 22 million , owing primarily to currency factors.
“The Swiss National Bank’s abolition of its previous minimum Swiss franc/euro exchange rate in January 2015 has had a negative impact on our booking trends,” says SWISS CEO Thomas Klühr. “To meet the structural challenges, we must coordinate even more closely within the Lufthansa Group, tap further synergic potential and align ourselves consistently to our customers’ needs.”
SWISS is well positioned and equipped, and will continue to modernize its aircraft fleet as planned. A total of six new Boeing 777-300ERs will be in service by the end of this year. And SWISS will also become the first airline in the world to put the new Bombardier CS100 into service when it does so in mid-July. The strength of the Swiss franc and the competitive disadvantage this brings will continue to weigh on revenues and earnings, however; and for 2016 as a whole SWISS expects to post an adjusted EBIT which is slightly below its 2015 level.
Passenger numbers and load factors stable
SWISS carried 3,498 million passengers in the first three months of 2016, a volume broadly in line with prior-year levels . The airline operated 38,905 flights in the period, up 2.7% ; and systemwide seat load factor amounted to 75.9%, a slight decline from the 78.9% of Q1 2015.
SWISS offered 2.3% more capacity systemwide in the first three months of 2016 in available seat-kilometre (ASK) terms. Total traffic volume, measured in revenue passenger-kilometres (RPKs), declined 1.7%.
Total cargo sales for the first-quarter period were 13.2% down. Cargo load factor (by volume) amounted to 74.0%, a decline of 5.3 percentage points (Q1 2015: 79.3%).
Strategy consistently implemented
SWISS had taken various actions under its “Next-Generation Airline of Switzerland” strategy by March 2016. The first of nine new Boeing 777-300ERs had been integrated into the aircraft fleet. The new long-haul fleet flagship will be primarily deployed on services to Hong Kong, Bangkok, Los Angeles, San Francisco, Singapore and Tel Aviv.
The new SWISS Boeing 777-300ERs also offer passengers internet connectivity aloft. Customers can choose from three data packages here. And as part of its new inflight internet facility, SWISS is also offering roaming phone services for a trial 12-month period.SWISS also opened new First Class, Business Class and Senator Lounges in Zurich Airport’s Terminal E during the first-quarter period.