Swiss earns less in the first half of the year due to increased competition
Published: Wednesday, Jul 31st 2024, 14:10
العودة إلى البث المباشر
Swiss is experiencing high demand and increased sales in the first half of the year. However, because the capacity bottlenecks within the industry have now been resolved, ticket prices are lower. This, together with higher expenses, is putting pressure on profits.
In the first half of 2024, Swiss brought 8.5 million passengers to their destination. This is 12.3% more than in the previous year and almost as many as in the first half of the pre-crisis year 2019 (8.8 million). "This summer we are already around 110 to 115 percent above the level of the pre-crisis half-year 2019," said Chief Financial Officer Dennis Weber on Wednesday at the presentation of the half-year results.
In an interview with AWP, he added that Swiss is not experiencing a drop in demand, as some tour operators are currently reporting. Where things are still lacking, however, is in business flights. "We are only seeing around 65 to 70 percent of business travelers at the pre-crisis level." And this figure is unlikely to recover any time soon.
"It looks as if a certain saturation has set in, especially on short-haul routes," says Weber, who has been Head of Finance at Swiss since May. "However, we were able to compensate for the loss of business travel by the very high demand for private travel - especially in the premium segment." In other words: whereas company bosses used to travel to their next meeting in Business Class, today Mr. and Mrs. Swiss get in the mood for their cruise with a Cüpli in Business Class.
Increasing seasonality
The shift from business travel to private travel is also accompanied by a change in travel dates. While flights used to be more widely distributed throughout the year, there are now more seasonal travel peaks during the vacation season, said Weber. A look at the passenger numbers confirms this: On a weekend this summer, for example, 184,000 passengers flew with Swiss in three days. "That has never happened before," he said.
Swiss has not always succeeded in getting passengers to their destinations on time. "Punctuality has fallen significantly since June," says the CFO. The target is 70 percent punctual flights, but the current rate is only 66 percent.
Weather phenomena in particular had put a spanner in the works for Swiss. Many thunderstorms and bise in early summer caused bottlenecks at the airport. According to Weber, punctuality is to be improved by Swiss spreading flights better throughout the day or by ensuring that flights take off on time in the morning. "We pay a lot of attention to this and work closely with our partners at the airport," says Weber. Because if there are delays in the morning, there will be subsequent delays throughout the day and it will be difficult to limit these again.
Capacity back to pre-crisis level
Meanwhile, Swiss is offering almost the same capacity in the summer months as before the coronavirus pandemic. Over the year as a whole, the capacity offered in seat kilometers should reach around 95 percent of the pre-crisis level.
However, it is not alone in the industry. Other providers also have almost the same supply as in 2019. The capacity bottlenecks that limited supply have now largely been overcome. "And it's clear: when increased supply meets growing but lower demand, prices fall," said Weber.
Although average prices are still above pre-crisis levels, they have fallen compared to the previous year. This is good news for passengers, who therefore have to pay less for flight tickets. For Swiss as a provider, however, it is less good news: operating profit fell by 22 percent year-on-year to CHF 264.2 million in the first half of the year. However, this was not only due to lower sales prices, but also to higher salary payments and higher expenses for fees, services and maintenance.
Swiss has improved its result from a minus of 60 percent in the first quarter of 2024 to a minus of 10 percent in the second quarter. However, Weber believes it will be difficult to match 2023 for the year as a whole. At that time, Swiss achieved a record result with an operating profit of 718.5 million.
©كيستون/إسدا
Arabic 
English 
German 
French 
Spanish