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Executive Talk

Swiss sees plenty of opportunities in economic crisis

Luc Citrinot, eTN Staff Writer in Lyon  Apr 14, 2009

Among European air carriers, Swiss is one of the few to look at the immediate future with relative optimism. Swiss CEO Christoph Franz gave some of Swiss secrets to eTN at the launch of the new Lyon-Zurich flight on March 30th.

How is Swiss doing in these challenging economic times?
Christoph Franz: I am extremely pleased with our results for 2008, especially in these challenging times as we achieved growth well above the market average. We carried last year 13.5 million passengers up by 10.3 percent. We achieved a load factor of 80.3 percent, up by 0.1 point a result which is one of the highest in the industry in Europe. Our EBIT [earnings before interest and taxes] is slightly down in 2008 at CHF 507 million compared to CHF 542 million in 2007. However, total income from our operating activities reached CHF 5.26 billion up by 7.6 percent over 2007.

How do you see the coming year?
Franz: I want to remain optimistic, as I believe that they are always opportunities to be seized in times of crisis. We are financially stable and we want to remain profitable to continue to invest in our fleet, our product and our route network. With such a strategy, we will able to gain further market shares over the competition. We see a weakening of the demand in the business travel sector but we have so far been able to achieve growth during the first months of the year. During the first quarter, we carried 2.95 million passengers, representing a limited decline of 1.6 percent over the same period last year.

You just launch new first and business class products on your intercontinental routes. Is it the right time for such a decision?
Franz: Air transport is still a growth sector in the longer term. We are a full-service carrier and must offer the best of Swiss hospitality. We have in mind a philosophy of quality where passengers should feel at home on board our aircraft. And to achieve this target, we must offer the best product to the market. With the delivery of new A330-300, we propose a revolutionary high quality product on board in our first and business class. First and Business class seats incorporate a Swiss-made innovation of an adjustable air cushion. This is world exclusivity! Quality is indeed a way to strengthen the loyalty of our passengers. And loyalty plays a protective role during crisis times.

How does Swiss adjust its network in times of weakening demand?
Franz: We are adjusting our network to the demand. We rather trim down frequencies than closing routes as it would be detrimental to our Zurich hub. We cut frequencies by one weekly flight to India, Johannesburg and Shanghai as well as to the USA except to New York. We will stop flying to Tripoli in Lybia as well as to Santiago de Chile and Singapore. However, we will still offer direct connections from Sao Paulo to Santiago with our partner TAM and with a Star Alliance partner from Bangkok to Singapore. In Europe, we feel proud to launch in these challenging times two new routes from Zurich to Lyon and Oslo.

How do you see the future?
Franz: We just announced the purchase of 30 Bombardier C-Series to replace our Avro RJ100 for our European network. Aircraft will be delivered in 2014 and we will be the launching customer. The aircraft will be extremely silent and also help us to further reduce fuel consumption by 25 percent to 30 percent compared to current aircraft. This shows our commitment to the future as we know that opportunities will arise again. We will aim to take full advantage of them, to strengthen and further expand Swiss market position.

Swiss sees plenty of opportunities in economic crisis

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