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Star Alliance provides no easy ride for Swiss

Franz sees Star Alliance as crucial to Swiss turnaround Keystone

Swiss International Airlines is still solely responsible for its own survival, despite joining Star Alliance, chief executive Christoph Franz told swissinfo.

Franz warned that the benefits of becoming a member of the global airline consortium did not extend to “corporate life insurance”, after Swiss sunk deeper into the red last year.

Franz was speaking at an event staged at Zurich airport on Friday to mark the milestone – Swiss officially joined on April 1 – in the fledgling company’s history.

“This is something that will contribute significantly to our turnaround, but every partner in the alliance is responsible for their own profit and loss statement,” Franz told swissinfo.

“We have to generate our turnaround on our own and show the strength and ability to come back.

“Star Alliance will clearly add to this strength, but it should not be perceived as some kind of corporate life insurance.”

Swiss posted a loss of SFr178 million ($136.4 million) for 2005, SFr38 million more than the previous year. Management blamed SFr41 million restructuring costs and currency adjustments equalling SFr65 million for the poor results.

German national carrier Lufthansa, a leading Star Alliance member, launched a takeover last year with chief executive Wolfgang Mayrhuber demanding a profit in 2007.

Family values

But Mayrhuber was in a more conciliatory mood on Friday, telling the conference: “Like in any family you don’t just share the sunshine, but also the hailstorms.”

Picking up on the theme, Franz told swissinfo that he expected to receive some shelter under the Star Alliance umbrella.

“In any family sometimes there are kids you have to take particular care of. We try to support colleagues who have some difficulties at home,” he said.

Swiss was created in March 2002 following the amalgamation of regional carrier Crossair and the remains of former national airline Swissair, which collapsed in 2001 after trying to create its own consortium by buying other airlines.

Shortly after launching, Swiss nearly joined Star Alliance’s rival One World before talks broke down at a late stage. Franz admitted that Lufthansa helped smooth the way into Star Alliance.

“We were very keen to join One World and were accepted as a candidate. In the end we did not join because we were not able to agree on certain conditions with British Airways,” he said.

“But we are very happy that things have worked out with Star Alliance. Having Lufthansa as a strong owner of the company opened the doors.”

Swiss is well on course to return a return a profit in 2007, despite uncertainties over fuel prices, Franz added.

“We are confident we will have an operational profit this year and we are heading towards net profit in 2007. Swiss has shown in the past that we were able to improve our bottom line despite the explosion of jet fuel prices,” he said.

swissinfo, Matthew Allen at Zurich airport

Swiss became the 17th member of Star Alliance on April 1, with South African Airways due to join later this month.

The alliance boasts a network of 842 destinations in 152 countries with harmonised timetables and reciprocal recognition of frequent flyer programmes.

Swiss is undergoing major restructuring to save costs, cutting its fleet from 35 to 24 aircraft by next summer. The fleet reduction comes on top of plans to slash between 800 and 1,000 jobs.

Star Alliance members:

Air Canada
ANA (Japan)
Asiana Airlines (Korea)
Lot Polish Airlines
Scandinavian Airlines
Singapore Airlines
Spanair (Spain)
Swiss Broadcasting Corporation TAP Portugal
United (US)
US Airways
Vario (Brazil)

South African Airways due to join on April 18

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR