SWISS: is the star in the Lufthansa Group starting to fade?

Since its takeover by Lufthansa in 2007, SWISS has outpaced its parent's passenger growth and has been the most profitable carrier in the Group. SWISS' long-haul network, significant for a carrier of its size, reflects the combination of a small domestic market with an affluent population. Moreover, its long-haul market position is strong.

Playing to its strengths, ASK growth of 2.7% in 2013 will focus on long-haul, specifically driven by SWISS' new Singapore route and additional capacity on New York and Beijing, while short/medium-haul capacity is reduced.

On the other hand, operating profit has been on a declining trend since 2007. For some years, unit costs have been falling, but unit revenues have been falling faster. Moreover, analysis of its unit costs reveals its CASK to be among the highest in Europe. While the Lufthansa Group expects to beat 2012's operating result this year, SWISS is only targeting a similar result to last year, suggesting that its period of over-achievement may be ending.