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Swiss Posts Steep First-Half Losses
Swiss International Airlines announced its consolidated financial results for the first half of financial year 2020. Global travel and quarantine restrictions imposed on a global scale impacted SWISS’ financial results severely for the first half of 2020.
Switzerland’s national flag carrier turned in an operating loss of 266.4 million francs ($291 million) in the first six months of 2020 — a figure that pales in comparison to the net profit of 245.3 million francs in the same period last year — as the novel coronavirus pandemic continues to hit the airline industry with full force.
The collapse in demand for air travel led to a 55% drop in revenue for the airline in the first half to 1.17 billion francs, which compares to an operating profit of 2.57 billion francs in the first half of 2019. In the first half of 2020, SWISS carried a total of 3,167,624 passengers, 64% fewer than in the previous year.
“Thanks to the prompt actions we took to safeguard our liquidity, our fixed costs have been substantially reduced,” Swiss Chief Financial Officer Markus Binkert said. “With the loans from the Lufthansa Group and the prospective bank credit facilities backed by the Swiss Confederation, our liquidity is secure. But we still need to further reduce our structural costs, to ensure that we can repay our loans as swiftly as possible.”
Having ramped up the flight operations in June, Swiss is slated to serve 85% of its previously served destinations by autumn. The airline’s 58 of 91 (41 short-haul and 17 long-haul) aircraft have been returned to service after being in storage at Zurich Airport and Dübendorf Airport.
SWISS Long-Haul Destinations Key to Recovery
Swiss is currently seeing an uptick in demand during the current summer holiday season in Europe. However, signs of recovery on tourist routes have not been seen on routes typically tilted more toward business travelers. Business travel is continuing to slow the recovery in demand as passenger numbers are mainly driven by tourists and leisure travel.
Swiss sees an extremely slow ramping up of the business travel, which impacts intercontinental traffic volumes severely as strict travel restrictions and quarantine measures continue to be in place globally.
“These positive trends in the demand for air travel in Europe make us cautiously optimistic,” said Swiss Chief Executive Officer Thomas Klühr. “We are well aware, though, that we still have a long way to go before this crisis is overcome. And one crucial factor for our substantial and sustainable recovery will be the further developments in our intercontinental business, particularly to and from the key North America region.”
The Swiss long-haul network comprised of 13 destinations in July, which is set to rise to 18 by October. The airline aims at intensifying its frequencies on routes already restored in its long-haul networks to attain a considerable and viable recovery.
However, the Lufthansa Group, the parent company of Swiss International Airlines, expects demand for air travel to return to pre-crisis levels in 2024 at the earliest. Particularly it expects long-haul network will not bounce back quickly, as announced by the group on Thursday.
“We are experiencing a caesura in global air traffic. We do not expect demand to return to pre-crisis levels before 2024. Especially for long-haul routes there will be no quick recovery,” said Carsten Spohr, chairman of the executive board and CEO of Deutsche Lufthansa AG.
Although Lufthansa plans to return to 70% of the long-haul destinations by the end of the year, it expects that important long haul routes, particularly to the U.S., will continue to be served only to a very limited extent due to ongoing travel restrictions.
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