Swiss struggles to stem losses

Is there light at the end of the tunnel for Swiss? Keystone Archive

Switzerland’s national carrier, Swiss, narrowed its net loss to SFr687 million ($546.5 million) in 2003, down from SFr980 million the previous year.

The company unexpectedly released unaudited figures on Tuesday ahead of its full-year results due on March 23. No explanation for the early release was given.

Swiss said the result – which was equal to losing almost SFr1.9 million per day – reflected the impact of restructuring efforts that have seen its fleet and route network cut by a third.

“The downsizing of the network and the fleet and a large-scale reduction in the size of the workforce have given Swiss a significantly more competitive cost structure in difficult markets,” the company said in a statement.

“Good progress has been made towards achieving a turnaround. However, a number of daunting challenges lie ahead and factors of uncertainty persist.”

The carrier’s operating loss shrunk from SFr909 million in 2002 (including start-up costs) to SFr497 million.

Restructuring costs amounted to SFr205 million.

Lagging behind rivals

Analysts said the numbers were roughly in line with expectations but noted that Swiss had failed to benefit as much from a sector upturn in late 2003 as many of its European rivals.

“The numbers are basically okay and somewhat better than expected in terms of turnover,” said analyst Patrick Schwendimann at Zurich Cantonal Bank.

“However, the competition has in recent weeks also published numbers and these are significantly better, and that is naturally rather worrying.”

Earlier this month, British Airways posted its best third-quarter profit in 12 years, while Air France beat analysts’ expectations for the same period.

No sign of fresh capital

Last autumn, Swiss introduced a new low-cost fare structure on its European network, in an effort to compete with budget airlines that have eaten into many of its core markets.

Swiss said revenue for 2003 was SFr4.13 billion, down from SFr4.40 billion in 2002.

The airline also said it had liquidity of SFr503 million at the end of last year.

Swiss made no comment about whether it had secured fresh operating loans in order to maintain its cash reserves.

The airline has been negotiating with its banks for extra financial backing.

Under Swiss law, the carrier must maintain a liquidity buffer of between SFr400-500 million, or risk having its operating licence revoked.

Shares in Swiss have risen by 17 per cent this year after shedding half their value in 2003.

swissinfo with agencies

Key facts

Operating loss for 2003: SFr497 million.
Net loss for 2003 (including restructuring costs): SFr687 million.
Revenue: SFr4.126 billion.
Liquidities on December 31, 2003: SFr503 million.