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Swiss prepares for deep cuts

Speculation about the future of Switzerland's troubled national airline, Swiss, has intensified as the carrier prepares to launch a new business plan on Tuesday.

Weekend media reports said Swiss could slash up to a third of its staff and fleet in an effort to save SFr500 million ($376 million) by the end of year.

Shares in Swiss were suspended from trade on Monday and Tuesday, as the airline’s board finalised a plan to stem daily losses of more than SFr3 million.

The airline’s chief executive, André Dosé, is expected to announce wide-ranging cuts to the airline’s long-haul network.

However, plans to reduce capacity have been complicated by a court decision last week, which Swiss said would prevent it from implementing the necessary cutbacks.

The airline was ordered by a court on Thursday to immediately reinstate 169 sacked pilots.

It also faces difficulties associated with its fleet renewal programme. Swiss was due to take delivery of a new Airbus A340, the first of twelve, by the end of the month – a move that the airline now says is in doubt.

Financial worries have also forced the Swiss government – which owns 20.4 per cent of the carrier – to consider issuing a “letter of comfort” in order to calm jittery investors.

“It is right if the government strengthens Swiss in this regard,” Transport Minister Moritz Leuenberger told the “SonntagsZeitung”.

Long-haul cuts

Hamstrung by a lacklustre global travel industry and a saturated aviation market, the 14-month-old airline is battling for survival.

Launched following the 2001 collapse of Swissair, the new national carrier was modelled as a classic “hub-and-spoke” operation, in which small and medium-sized aircraft serving regional European cities would funnel passengers to long-haul flights departing from Zurich and Geneva.

However, the airline’s regional network has been responsible for some of its largest operating losses, while the long-haul network has been buffeted by the war in Iraq, the Sars pneumonia virus and a stalling global economy.

Swiss recently announced it would spin-off its regional network by creating a new low-cost carrier, to be known as “Swiss Express”.

Cloud over Dosé

Investors are now carefully watching how Dosé controls losses linked to the long-haul network, which has already been trimmed in recent months.

The SonntagsZeitung said as many as 3,500 jobs could go and 37 planes may be grounded.

The seemingly never-ending stream of negative headlines about Swiss has also fuelled speculation about Dosé’s position.

In its most recent editorial, the “NZZ am Sonntag” newspaper listed the mistakes made by the airline under Dosé’s stewardship.

“You have to ask yourself, whether Dosé isn’t the wrong man to put the airline back on course,” questioned the paper.

swissinfo, Jacob Greber in Zurich

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR