Media release Zurich Airport, 31 July 2014 2014 first-half financial results SWISS posts stable first-half result SWISS reports an operating profit of CHF 118 million for the first six months of 2014, up 64 per cent on the same period last year. This result is primarily due to a new method of calculating depreciation. Total income from operating activities amounted to CHF 2,517 million, practically unchanged against the prior-year period. In the first six months of 2014 Swiss International Air Lines (SWISS) generated a total income from operating activities of CHF 2,517 million, an amount that changed slightly from the year prior (1st half of 2013: CHF 2,515 million.). However, SWISS was able to increase its operating profit by 64 per cent, to CHF 118 million (1 st half 2013: CHF 72 million) but this figure must be considered in light of a change in the method of calculating depreciation adopted by the Lufthansa Group at the beginning of the year. If the effect of this change is excluded, the result remains on prior-year level. A difficult market environment persisted in the second quarter of 2014. The operating profit of CHF 115 million was better than the corresponding outcome for the second quarter of 2013 (Q2 2013: CHF 96 million). At CHF 1,326 million, second-quarter operating income was little changed vis-à-vis the prior-year period (Q2 2013: CHF 1,325 million). The company is feeling increasing competitive pressure, particularly in Europe but also on North Atlantic routes. Yield erosion had a sharp impact on profitability during the period under review. The weakness of foreign currencies against the Swiss franc and relentlessly high fuel prices pose additional strains. "In comparison with competitors SWISS is performing relatively well, but we see no sign of market conditions becoming more favourable. Hence, we must continue to work hard for our success," commented SWISS CEO Harry Hohmeister. SWISS remains on course with the result improvement programme SCORE. At present, SCORE projects with the potential to improve results by CHF 86 million for 2014 are envisioned, which puts SWISS significantly above the SCORE results for 2012 (CHF 49 1/5
million) and slightly below the level for 2013 (CHF 98 million). Currently at SWISS, 269 SCORE measures are either in progress or have already been completed. Expanded product range and new fare structure for Europe Innovative projects in 2014 include the marketing of extra services (Added Value Offers) as part of the new commercial strategy, the reorientation of Geneva as a SWISS base, and a fare scheme that accents flexibility. In response to changing customer needs SWISS completely revised its online presence on swiss.com in the second quarter of the year. The new website is considerably more user-friendly and features many new functions. The relaunch has been very well received by customers, with an increase of almost 10 per cent in the number of visitors to swiss.com recorded thus far. In combination with the new-look website, SWISS will push further ahead in the coming months by expanding its range of services under the label SWISS Choice, whereby it aims to offer customers even more flexibility and the opportunity to tailor travel to their own individual preferences. In addition to be able to make provisional booking at a guaranteed price, customers can now make an advanced seat reservation, arrange a special inflight surprise or order duty-free articles ahead of their flight. Parallel to the SWISS Choice offers, the launch has taken place of a new pricing concept for flights from Zurich to destinations in Europe. It allows SWISS customers to take advantage of attractive fares free of a minimum-stay requirement, one-way fares to selected European destinations, and low fares for Business Class travel. Initially, these offers apply to 17 European destinations but this figure is set to increase over the course of the rest of the year. Plans forged for realignment in Ticino and Basel During the second quarter SWISS took the decision to continue service on the Zurich- Lugano route upon the expiry of its contract with current operating partner Darwin Airlines. As of 1 November 1, sister airline Tyrolean Airways will serve Lugano four times daily on behalf of SWISS, deploying technically advanced Dash 8-Q400 turboprop equipment. Capacity on the flights offered in partnership with Tyrolean Airways will be 76 seats per flight, which represents an increase of 50 per cent. "We are particularly pleased that in Tyrolean we have found a strong partner within the Lufthansa Group for the operation of this route, remarked SWISS CEO Harry Hohmeister. 2/5
As of 2015, a new solution will be implemented for service to and from Basel. The relevant plan, with SWISS having been a key driver behind its creation, will see Lufthansa develop a new WINGS platform in Basel, the first such platform outside Germany. Under the new WINGS master brand the Lufthansa Group will bundle its existing point-to-point air travel platforms. Consideration is also being given to extending this concept to intercontinental services, too, as a means of addressing the high-growth private air travel market. The implementation of this Group solution is designed to strengthen its presence in Basel. The stationing of two to four Airbus A320s will increase Group capacity in Basel and offer local customers an attractive product at competitive prices. The route network will be increased from its existing level. Passenger numbers and seat load factor remain stable SWISS transported 7.74 million passengers in the first of 2014, a decrease of 0.5% from the prior-year period (2013: 7.77 million). The number of flights operated was reduced by 1.9% to 71,518 (2013: 72,899). The systemwide seat load factor was 81.7%, slightly lower than for SWISS flights in the corresponding period a year ago (2013: 82.6%). Capacity (expressed as available seat kilometres / ASK) on the full route network was increased by 2.1% in the first half, while traffic volume (in revenue passenger-kilometres / RPK) climbed by 1.1%. Total cargo sales, calculated by cargo tonne-kilometres, marked a 5.8% gain over the prior-year equivalent. Cargo load factor (by volume) was also up slightly at 79.6%. The overall seat load factor trended slightly lower during the second quarter 84.4%, a 0.9% decline. Systemwide capacity, calculated in available seat kilometres (ASK), was raised by 1.9%, while the number of revenue passenger-kilometres (RPK) moved up by 0.8%. Also during the second quarter, total cargo sales improved by 6.4%. Cargo load factor was 1.5% than for the same period in 2013. Key figures from income statement 1st half-year 2nd quarter in CHF millions 2014 2013 2014vs.2013 2014 2013 2014vs.2013 Total income from operating activities 2,517 2,515-1,326 1,325 - Operating profit 118 72 +64% 115 96 +19% 3/5
Traffic figures 1 st half-year 2 nd quarter 2014 2013 2014vs.2013 2014 2013 2014vs.2013 SLF Europe 74.5% 74.9% -0.4% pts. 77.9% 78.5% -0.6 pts. SLF Intercontinental 85.1% 86.2% -1.1% pts. 87.5% 88.6% -1.1 pts. SLF Total 81.7% 82.6% -0.9% pts. 84.4% 85.3% -0.9 pts. Employees and workforce expansion SWISS remains a job-creator that offers young people with an enthusiasm for air transport the opportunity to realise their career ambitions. Since 2006 the company has created 1,600 new positions and added approximately 2,000 employees to the payroll. The number of full-time positions worldwide stood at 6,985 as of the end of June (June 2013: 6,960), while the number of employees amounted to 8,265 (June 2013: 8,171). The introduction of new aircraft types to the fleet between 2015 and 2017 is forecast to generate an additional 500 jobs. Fleet As of the summer 2014 timetable, the SWISS fleet comprised 85 aircraft of its own plus five more held on a wet-lease basis. The company continues to invest in fleet and product modernisation. On the order books are 30 CSeries from Bombardier, six Boeing 777-300ER, one Airbus A330-300 and one A321 aircraft. Outlook SWISS expects to clearly surpass the positive result of the previous year (CHF 264 million) largely due to the change in the method of calculating depreciation for aircraft. Swiss International Air Lines (SWISS) is Switzerland s national airline, serving 84 destinations in 40 countries from Zurich, Basel and Geneva and carrying some 16 million passengers a year with its 90-aircraft fleet. The company s Swiss WorldCargo division provides a comprehensive range of airport-to-airport airfreight services for high-value and care-intensive consignments to around 120 destinations in over 80 countries. As the airline of Switzerland, SWISS embodies the country s traditional values, and is committed to delivering the highest product and service quality. With its workforce of 8,250 personnel, SWISS generated total operating income of some CHF 5.17 billion in 2013. SWISS is part of the Lufthansa Group, and is also a member of Star Alliance, the world s biggest airline network. 4/5
For further information, visit www.swiss.com > About SWISS > Financial information Contact Swiss International Air Lines Ltd. Media Relations P.O. Box, 8058 Zurich Airport Switzerland Phone: +41 848 773 773 Fax: +41 44 564 21 27 media@swiss.com swiss.com 5/5