Airline chief upbeat despite losses

Christoph Franz waves away the doubters swissinfo.ch

Despite gloomy first half results, the Swiss chief executive Christoph Franz told swissinfo that the national airline is moving in the right direction.

Swiss reported a net loss of SFr89 million ($70.6 million) in the first six months of 2005, comparing unfavourably with a SFr33 million ($26 million) deficit in the same period last year.

But Franz pronounced that he was not “too dissatisfied” with the way things were going with Swiss in the process of being taken over by the German carrier Lufthansa.

swissinfo: Were you surprised by the poor financial results?

Christoph Franz: It did not come as a surprise. We have tripled our net loss, which is bad news for everybody. On the other hand we were able to slightly improve our operational result.

What we have to look at is what were the entrepreneurial successes and failures that were reflected in the operational results. From this point of view we cannot be too dissatisfied.

But given the changes in the currency exchange rate our debt for the financing of aircraft, which is in US dollars, has increased [due to the strengthening of the dollar], creating a loss.

swissinfo: How optimistic are you that things will brighten up for Swiss?

C.F: I am optimistic because we have a sound restructuring process underway and up to now we have been able to implement all the necessary measures in time.

We are not satisfied with the collective labour agreements because we had hoped to conclude these agreements in the first half of 2005. This is not the case, but hopefully we will come to an agreement.

It is quite clear that agreements are easy to get if you make a lot of concessions, but continuing price pressures have narrowed our room for compromise.

swissinfo: Will there be further job losses or downsizing of your fleet?

C.F: I hope this will not be necessary and we will do everything we can to prevent further downsizing. Basically we have already stopped downsizing [after the current round of cuts] and what we are now doing is restructuring and at the same time lowering our unit cost.

swissinfo: How important is it to meet Lufthansa’s expectation that you are in profit by 2007?

C.F: I personally am not driven by Lufthansa’s expectations but I feel 100 per cent responsible for the result of Swiss. First of all I am driven by my own expectations and aspirations.

Since I took this my position my primary goal has always been to lead the successful turnaround of Swiss. Comparing the situation a year ago with today’s situation, I think I can be satisfied.

swissinfo: Will the “premium quality” brand work for Swiss?

C.F: Swiss has a clear brand image worldwide as a quality carrier. We are proud of this and we try to live up to these standards every day.

But it does not mean that high quality is linked with high prices. The reality of the market that we are working in shows that you need attractive offers for price-sensitive customers. The development of the seat load factor clearly shows that this has been accepted. We have succeeded in finding additional customers who are attracted by our product.

swissinfo: Do you expect Zurich to retain its status as an international hub?

C.F: Definitely. I hope that we will be able to grow again in Zurich.

swissinfo-interview: Matthew Allen

Key facts

Swiss has said that it is reducing its short-haul fleet from 35 to 24. In February the airline announced up to 1,000 job losses.
Chairman Peter Bouw will step down in September with four other board members.
The European Union approved Lufthansa’s takeover of Swiss in July.