SWISS: Lufthansa Group's most profitable airline must cut costs by labour productivity improvement

SWISS is set for an eventful 2016, taking on a new CEO and two aircraft types new to its fleet. Thomas Klühr will move from his current position, as head of hub Munich for SWISS parent airline Lufthansa, to succeed Harry Hohmeister, who takes on responsibility for all Lufthansa Group's premium airlines in Feb-2016. That month SWISS will also deploy its first Boeing 777-300ER on the Zurich-New York route. The airline is the launch customer for the Bombardier CSeries, the first of which it expects to have in the middle of the year.

In this report we review SWISS' financial performance, which receives little attention separate from analysis of its parent group. For some years the most profitable airline in the Lufthansa Group, SWISS has consistently managed to lower its unit cost more rapidly than the fall in unit revenue. However, as LCC competition intensifies and Gulf airlines make further inroads into its market, SWISS cannot afford to rest on its laurels. It is among Europe's high unit cost airlines and our analysis indicates that labour productivity measures have declined. This should be an area of focus for Mr Klühr.