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SAir FY99 profit drops 24%
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March 6, 2000: 6:26 a.m. ET
Swissair owner hit by dearer fuel, stiffer competition; service arm expands.
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LONDON (CNNfn) - SAirGroup, the owner of airline Swissair, on Monday said 1999 earnings fell 24.4 percent as higher fuel prices, stiffer competition coincided and lower traffic cut earnings from its core airline business by more than two-thirds.
Europe's fourth-largest airline group by sales said net profit fell to 273 million Swiss francs ($162.8 million) - in line with the consensus of forecasts among analysts polled by Reuters -- from 361 million a year earlier.
However, a 15.1 percent rise in sales to 13 billion francs and an 8.1 percent dip in operating profits were both ahead of forecasts.
"That is an extremely strong result," analyst Patrick Schwendimann at Zuercher Kantonalbank told Reuters.
SAirGroup shares rose 1.4 percent to 324 francs in morning trade in Zurich.
The company said the airline unit's profit before interest and tax fell to 108 million francs from 354 million.
As profit from air transport dropped and the company moved further into other services, SAirGroup said more than 50 percent of sales and earnings now came from airline-related activities.
The company pointed to an improved performance by its SAirRelations unit, which provides catering and retail services, and SAirServices, its technology and baggage-handling business.
"Airline-related activities made a substantial contribution to these results, helping offset the adverse impact of the downturn in the airline industry," the company said in a statement.
Swissair leads the nine-airline Qualiflyer alliance, whose members include Belgium's Sabena, Lot Polish Airlines and South African Airways. SAirGroup bought stakes in Lot and SAA last year and already has a 49 percent stake in Sabena. Qualiflyer is the smallest of the world's four main international airline groupings, behind Star, which is led by Deutsche Lufthansa (FDAH) and United Airlines (UAL: Research, Estimates); oneworld, which features British Airways (BAY) and American Airlines; and Wings, the alliance led by Northwest Airlines (NWST: Research, Estimates).
Swissair last year ended its long-standing alliance with Delta Air Lines (DLA: Research, Estimates), signing up AMR Corp.'s (AMR: Research, Estimates) American Airlines as its U.S. partner. 
-- from staff and wire reports
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SAirGroup
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