MIAMI – Three sister airlines, Swiss (LX), Austrian (OS), and Brussels Airlines (SN), all members of the Lufthansa Group (LH) and all navigating the difficult waters of the COVID-19 induced crisis, have issued their respective mid-year financial report.
SWISS Mid-year Report
Within LX, the loss for the first six months of 2021 stands at US$431.7m (CHF398.2m) and the reason is common for all the airlines: Covid-19 travel restrictions, unfortunately still in force in many countries and with little hopes of seeing it relenting soon.
Efficient capacity control along with costs and cash management has helped to temper the loss and keep it as reasonable as possible while a positive cash flow has been effective during the second quarter of 2021 (Q2). Revenue however declined by 43.5% when compared to the previous year, and amounted to US$714.8m. In Q2 2020 revenue stood at US$1.10bn (CHF1.17bn).
As for every year, the approach of summer vacation travel has generated a slight upturn in passengers volume without alleviating the situation that remains tense. To remain competitive and capable o investing when necessary, LX has entered into a restructuring action comprehensive of reduction in its personnel numbers and fleet.
Dieter Vranckx, LX CEO, commented on the Q2 report by stating: “The slight upturn in business that we have seen in the last few weeks should not disguise the fact that, with further pandemic developments still hard to predict, the situation remains extremely tense.” He continued by adding “But despite all these imponderables, we will continue to perform our mission and mandate as The Airline of Switzerland and offer our guests a range of air services that is as broad and as reliable as possible.”
Austrian Airlines Mid-year Report
The situation was not different for OS and Alexis von Hoensbroech, OS CEO, while presenting the mid-year report, resumed it by saying “Virus variants, the travel restrictions often associated with them, and low demand for long-distance and business travel are clearly slowing down the recovery of the aviation industry. The increasing number of bookings in summer gives us some breathing space, but the crisis does not allow us to breathe a sigh of relief.”
When compared to the same period of 2020, OS results are not bad within a revenue of US$148mn (€126m), a jump of 260% on the previous year. when revenue amounted to only US$41m (€35m) with only two weeks of operations during the month of June. When the comparison is made against results registered for Q2 2019 the picture is grim with a 79% decline in total operating revenue and an adjusted EBIT of minus US$111m (€95m) against a minus US$116m (€99mn) for Q2 2020 and a positive US$54mn (€46m) for Q2 2019.
To contain the loss OS had to reduce its workforce by 9% with 1350 full-time positions being relinquished with 850 of them by natural turnover. The same fate followed for the OS fleet which has been reduced to 73 aircraft with the retirement of the de Havilland Dash8 and 767 fleets.
Because of traffic restrictions, passenger numbers fell by 44% to 1.1mn against 2mn in Q2 2020 and 6.7mn in Q2 2019. The Available Seat Kilometer (ASK) stood at 2.9bn at 37% lower than in the previous year. Domestic traffic booking amounted to 53.1%, lower than 68.1% for 2020.
As far as the outlook is concerned, the gap between 2019 and 2020 results shows that the situation is in no way near normalization. The continuing uncertainty on the future makes forecasts extremely difficult, both in terms of business and long-haul travel, while short-term booking passenger’s behavior continues to reflect uncertain times ahead and negatively impact future results.
Brussels Airlines Mid-year Report
Within SN the trend is not different from the preceding sister airlines. The continuing Covid-19 pandemic is strongly impacting results and SN reports a negative EBIT of minus US$167.5m (€143m) for Q2 2021 with travel restrictions and the nonessential travel ban severely hitting SN passenger traffic.
Q2 revenue was reported down by 45% when compared to 2020, amounting to US$161.7m (€138m) against US$295m (€252m) reported for Q2 2020. Passenger traffic went down by 57% when compared to January to the same period of 2020 and the load factor lost 11.7% to 60.7%. The production level has not recovered and is still far from the pre-crisis levels.
The loss was contained by a downtrend in operating expenses of 37%, mainly due to the decline in materials and services costs linked to the reduction in operations. The almost completed restructuring program Reboot Plus has helped to reduce expenditure but fixed costs are still putting pressure on expenses and results.
Flights operated during Q2 2021 were down by 55% – 6295 flights – compared to 14114 fights during the previous Q2 and an almost complete stop between March 21 and June 14, 2020. As a consequence, the passenger number fell from 1.59mn in 2020 to 676372 in Q2 2021 with a load factor of 60.7%, down from 72.4% registered during Q2 2020.
To further contain losses, SN has applied and almost completed a restructuring and transforming plan, the Reboot Plus, consisting in the reduction of the fleet size by 30% and the workforce by 25% with the aim to render possible a sustainable and profitable future which would also include a lesser environmental footprint.
To render possible this last part of the Reboot Plus plan, The LH Executive Board and the SN Holdings Board of Directors have authorized the acquisition of three Airbus A3230 neo aircraft set to be delivered during the Summer of 2023. The new types are meant to replace the older Airbus 319 and help SN to reach the target of a 50% reduction in CO² emissions by 2030.
The airline, considering the volatility of the situation and the uncertainty of its developments, has not made any forecast for the immediate future.
Featured image: Swiss Airbus 320-200 HB-JDA. Photo: Fabrizio Spicuglia/Airways