Airline chairman prepares to bow out

Pieter Bouw steps down as chairman of Swiss on Thursday Keystone

Ahead of his departure as chairman of Swiss International Airlines, Pieter Bouw tells swissinfo he made mistakes but can leave with his head held high.

Although Swiss continues to make heavy losses, Bouw is upbeat about the carrier’s future following its recent takeover by German rival Lufthansa.

Bouw was made chairman of Swiss when the airline was founded following the collapse of Swissair in 2001. He is due to step down on Thursday when the board of directors will be reshuffled.

His appointment four years ago was greeted with scepticism by some aviation experts, who questioned whether the former chief executive of Dutch carrier KLM was up to the task of turning the remnants of Swissair into a new national carrier.

He says the biggest challenges facing Swiss following the deal with Lufthansa are high fuel prices and an ongoing row with the airline pilots’ union, Aeropers, over working conditions.

swissinfo: You’ve been in the job for nearly four years and during that time have failed to steer Swiss into profitability. Half-year results for 2005 were disappointing and net losses rose sharply…

Pieter Bouw: The negative results in the first half of this year were mainly caused by incidental issues, and, fundamentally, the high price of fuel. All the other costs were controlled quite nicely and revenues are improving substantially. On an operating level, the company is doing better than the year before.

I’m of the opinion that it would have been impossible to have Swiss operating at a sustainable profit on its own. I think it was necessary to merge into another entity, in this case with Lufthansa. But we still have to cut costs even further, in particular the pilot costs. We don’t want them to earn less, but we’d like them to give us more hours, then the costs would go down.

swissinfo: But fuel prices are likely to remain high and there’s increasing competition from low-cost airlines. How can Swiss meet these challenges?

P.B.: We have to accept that certain markets are not accessible to us and we shouldn’t base our strategies on the low-cost market alone. We have to focus on adding value, particularly on the intercontinental flights. And as far as European flights go, we can add value for the business traveller. But we have to drive down our costs substantially there. That’s been a real issue with the pilots’ union over the past three or four years and will probably remain so in future.

swissinfo: There’s been talk of Swiss spinning off its regional European operations. Is that a possibility?

P.B.: It’s a lot more than a possibility. It’s the only way forward, but no decision has yet been taken. We proposed it two or three years ago, but the pilots’ union was completely against it. We had to give in because we could not put everything at risk. A strike at that time would have meant death for the whole company. But if they had let us do this, we could have kept hundreds more jobs.

Now the pilots’ contracts are running out and we are committed to creating an entity, Swiss European Airlines, which should have separate labour contracts with the pilots.

swissinfo: Would this company still be controlled by Swiss/Lufthansa?

P.B.: Yes.

swissinfo: Turning to the issue of the airline’s integration with Lufthansa. Can Swiss safeguard its identity and brand even though it has been bought by a former rival?

P.B.: Yes, I’m very confident about that. Part of the business-integration agreement with Lufthansa includes the policy decision that Swiss would be the premium brand within the Lufthansa Group. That means the Swiss brand always has to be maintained and that the Zurich hub will have the same potential for growth as Frankfurt and Munich. Those two points are more or less guaranteed under the business concept we agreed upon.

Of course over time there will be more and more strategic alliances with Lufthansa, but always on the condition that Swiss remains an independent operating company.

swissinfo: If you could start all over again, what would you do differently?

P.B.: Our focus at the start was on getting the airline into the air and we then continued to restructure thereafter. But with the benefit of hindsight, I should have called the pilots’ bluff earlier.

Having said that, we maintained the Swiss brand and have made a good deal with Lufthansa. Of course, we did not expect Sars, the Iraq war, the economic downturn in the airline industry and high fuel prices. And we underestimated the impact of the low-cost carriers, which was a professional mistake.

But my colleagues in the industry tell me “Pieter, it’s a miracle what you did there”. Don’t forget that if Swiss hadn’t been established, Switzerland’s airports and companies like [airline catering firm] Gate Gourmet would have been in immediate danger. We would have lost far more value than the SFr2.5 billion that was put into the company to get it started.

swissinfo: Finally, are you glad to be leaving Swiss after nearly four years at the helm?

P.B.: In a way, I’m happy that it’s over and done with. But more importantly, I’m happy… that we safeguarded Switzerland’s priorities, namely keeping connectivity to and from the country, maintaining the aviation infrastructure and saving as many jobs as possible.

swissinfo-interview: Vanessa Mock

Key facts

Pieter Bouw was born in the Netherlands in 1941.
He worked at Dutch carrier KLM from 1967 to 1997.
From 1991 to 1997 he was KLM’s president and chief executive officer.
He was appointed chairman of Swiss in November 2001.
Between March and October 2004, he also assumed the role of chief executive officer, following the resignation of André Dosé and before the appointment of current CEO Christoph Franz.
He steps down on September 22, as part of a reshuffle of the board of directors following the company’s recent acquisition by Lufthansa.

In brief

On September 22, an extraordinary shareholders’ meeting in Basel elected a new board of directors, reducing it as planned from eight to five members.

Previous board members Jacques Aigrain, Walter Bosch and Rolf Jetzer stood for election and were elected for a further term of office.

Jetzer will become chairman, while Bosch will serve as deputy chairman.

Newly elected to the board were Wolfgang Mayrhuber and Klaus Schlede, who will serve as Lufthansa’s representatives.

Those retiring were Pieter Bouw, Claudio Generali, Michael Pieper, Jan Audun Reinas and Peter Siegenthaler.