Switzerland is debt-free again

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Switzerland continued its rise at the beginning of the year. The Lufthansa subsidiary posted an operating profit of CHF 78.4 million in the first three months. Last year, the airline suffered an operating loss of CHF 47.4 million.

Revenue continued to increase in the first three months of 2023: sales rose to 1.1 billion francs after 712 million francs in the same quarter of the previous year, as Switzerland explained in a communiqué.

However, bullish should be placed in perspective. A year ago, the first quarter was still slowing significantly due to the Omikron variant of the coronavirus and the start of Russia’s war against Ukraine, but at that time demand had already increased sharply.

“Great desire to travel”

However, the current result is extremely strong, Swiss wrote. The basis for this is lower costs and high reliability of the flight schedule as a result of the 2021 restructuring.

CFO Markus Binkert explained that one is in a good structural position and could benefit from a good market situation. “The great desire to travel continues to drive strong demand for air travel, while at the same time the industry-wide offer is still dwindling after the Corona years.”

In the first quarter of 2023, Swiss carried a total of over 3 million passengers. This is an increase of over 70 percent compared to the same period last year. At the same time, the number of flights increased by 47 percent.

81 out of 100 seats are occupied

This meant that the plane was used for much better capacity: an average of 81 out of 100 seats were occupied. That’s a very high value, Swiss wrote. A year ago, only 62.9 percent of the average seats were occupied.

Swiss offered a total of 40.2 percent more seat kilometers in the first quarter across its entire route network (measured in available seat kilometers, ASK); this indicator represents the unit of performance in air transport.

High demand and still dwindling supply in the post-Corona aviation industry meant there were fewer cheap airfares. Average revenue increased, which is positive for the Swiss airline. “Also, Switzerland’s strong domestic market was an advantage for Switzerland,” he said.

The freight business also contributed significantly to the result. However, Swiss wrote that the record yields of the past Corona years are no longer reached. The freight business exploded during the pandemic. Now Switzerland has again performed significantly fewer pure cargo flights.

With its quarterly financial statements, the Swiss airline once again reached the level of liquidity it had before the crisis. Swiss repaid the Corona bank loan guaranteed by the federal government at the end of May 2022 before maturity and financed itself in the capital market through the Lufthansa Group.

Switzerland is debt-free again

With the strong first quarter result, Swiss has now been able to pay back this financing, which means it’s in a position to fully invest once again, as written. Binkert said Switzerland is debt-free again.

In the current year, the Lufthansa subsidiary is still planning about 85 percent capacity in current seat kilometers compared to 2019 before Corona: One of the top priorities for the coming months is once again the highest possible stability in flight operations. “Swiss will do everything in its power to provide its customers with the highest possible level of reliability.”

Rising travel demand and higher ticket prices have also given a lift to parent company Lufthansa. In the first quarter, the seasonally typical operating loss (adjusted EBITDA) was 273 million euros, almost half the year-over-year impact affected by the pandemic.

Net loss decreased by only one fifth to 467 million euros. According to the adjusted figures, sales increased by 40 percent to 7 billion euros. According to a Lufthansa statement, the group is on track to significantly exceed its operating profit of 1.5 billion euros from 2022 this year, as planned. (pbe/SDA)

Source :Blick