• 31-JUL-2018

  • Zurich Airport

SWISS posts a substantial improvement in its first-half earnings

SWISS achieved adjusted earnings before interest and taxes (EBIT) of CHF 330 million for the first six months of 2018 (1st half 2017: CHF 197 million1)). Total revenues for the period were also increased, climbing 10 per cent from the CHF 2.35 billion of January-to-June 2017 to CHF 2.58 billion. First-half earnings were boosted by efficiency gains through both fleet modernization and capacity expansion. The additional capacity offered by the new short-haul and long-haul aircraft deployed was successfully sold, with particularly strong demand seen in SWISS’s home market. Earnings were further buoyed by various non-recurring items. The company expects to post an adjusted EBIT for 2018 as a whole that is broadly at or slightly above its prior-year level.
 
Swiss International Air Lines (SWISS) reports a substantially improved operating result for the first six months of 2018. Adjusted earnings before interest and taxes (EBIT) totalled CHF 330 million, a 67-per-cent increase on the CHF 197 million1) of the prior-year period. Total revenues were raised 10 per cent to CHF 2.58 billion (1st half 2017: CHF 2.35 billion).
 
First-half revenues were boosted by the successful sale of the additional capacity created by the entry into service of new Boeing 777-300ER and C Series equipment. Eight new C Series aircraft were deployed onto the SWISS short-haul network in the first-half period, raising total C Series numbers to 23. And two further Boeing 777-300ERs entered SWISS long-haul service during the period, increasing the Boeing 777 contingent to a ten-aircraft fleet. SWISS also felt particularly strong demand for its services in its home market during the first-half period. Systemwide seat load factor for January to June averaged 81.5 per cent, a 0.9-percentage-point improvement on the same period last year.

Further contributors to the substantially higher first-half earnings result included the enhanced cost structures deriving from fleet modernization activities: with their advanced engine, systems and materials technologies, both the C Series and the Boeing 777-300ER are more cost-effective to operate than the types they have replaced. Earnings were also buoyed by various non-recurring items.
 
A strong second quarter
 
SWISS maintained its positive first-quarter earnings momentum in the second-quarter period: Adjusted EBIT for April to June 2018 totalled CHF 224 million, a 38-per-cent increase on the CHF 162 million1) of the second quarter of last year. Second-quarter revenues also showed a year-on-year improvement, rising 11 per cent from CHF 1.26 billion to CHF 1.40 billion.
 
“We are very pleased to have maintained our successful business course of the first quarter of this year,” says SWISS CEO Thomas Klühr. “These favourable first-half results are partly attributable to non-recurring items,” he concedes. “But we have managed to both sell our expanded capacities in the market and – thanks to our new aircraft – lower our unit costs. The competition will remain intense or further increase, and the pressure on fares is still high,” he adds. “We are confident, however, that we can continue to more than hold our own in our various markets.”
 
Outlook
 
SWISS expects a continuation of the current positive business trends. Further earnings will, however, be depressed by the steep recent increase in fuel prices. While the adverse impact of a higher oil price was substantially mitigated by fuel hedges in the first half of the year, the cushioning effect of these will diminish over time in the second-half period. Overall, SWISS expects to report an Adjusted EBIT for 2018 that is broadly at or slightly above its prior-year level.
 
Fleet modernization continues
 
Renewing the SWISS aircraft fleet will remain a priority. To this end, two further Boeing 777-300ERs have now been ordered. These aircraft are scheduled to enter service at the beginning of 2020, and will be used in particular to expand the route network. SWISS will also be equipping its five remaining Airbus A340-300s with a new cabin product in all three seating classes. And the integration of its ten new CS100s and twenty new CS300s will be completed by early 2019.
 

1) SWISS replaced EBIT with Adjusted EBIT as its prime financial indicator at the beginning of 2018. SWISS’s first-half report for 2017 showed an EBIT of CHF 200 million for the first-half period and an EBIT of CHF 163 million for the second-quarter period.

CONTACTS

  • SWISS Media Relations
    SWISS Media Relations
    Switzerland
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