Swiss International Air Lines, controlled by Deutsche Lufthansa, posted a gaping first-half net loss on Thursday and said it would further reduce its fleet to slash costs. It said record-high oil prices and a strengthening dollar wiped out any progress made in returning to profit after three years of losses.
Swiss reiterated it aimed to break even for the first time next year and its Chief Executive Christoph Franz told reporters Swiss sought to narrow its operating loss this year from last year's 122 million francs ($97 million).
Formed in 2002, Swiss has struggled with its strategy of offering long-haul flights to a wide range of destinations in the face of a relatively small home market and the constant erosion of its short-haul European revenues by budget carriers.
The firm said on Thursday it would cut back its fleet of short-haul aircraft to Airbus 320 and Avro RJ models, ditching older Embraer and Saab jets.
Swiss reported a deeper first-half net loss of 89 million francs from 33 million a year ago.
It said high fuel costs shaved 104 million francs from its operating result and "for the most part neutralised the positive results achieved from Swiss's current restructuring process, and substantially hindered progress on its turnaround".
Earnings were also hit by interest payments and 48 million francs in currency adjustments on dollar-denominated debt.
The overall loss before interest and taxes and before restructuring costs narrowed to 9 million francs from 19 million, helped by cost cuts and one-off income.
Germany's Lufthansa bought the cash-starved airline in a deal worth up to 310 million euros earlier this year. Swiss said on Thursday that its planned integration into the Lufthansa group was on track.
Lufthansa said earlier this month it had increased its stake in Air Trust, the company set up to enable it to buy Swiss, to 49 percent after US and European Union cartel authorities approved the deal.
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