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Swiss axes 3,000 jobs

Swiss is slashing its network by 35 per cent

(Keystone)

Switzerland's troubled national airline, Swiss, has announced it is cutting 3,000 jobs and reducing its fleet by a third.

The carrier, which is slashing its network by 35 per cent, said the "drastic action" was aimed at saving SFr1.6 billion ($1.21 billion).

Swiss said it would also require SFr500 million in additional financing to ensure financial stability during the restructuring.

Around 700 pilots and 850 cabin crew will lose their jobs. Up to 1,500 ground staff are also affected.

The loss of 34 aircraft will reduce the size of the Swiss fleet to 74 planes, excluding charter vessels.

The airline is cutting its long-haul fleet from 25 to 18 aircraft, the medium-haul fleet from 24 to 21, and the regional fleet from 59 to 35.

"The board of directors is convinced that the planned restructuring is an essential condition for the survival of Swiss," the airline said in a statement.

Government reaction

The Swiss economics minister, Joseph Deiss, said he was "shocked" by the decision.

"As head of the economics ministry, it is my job to ensure that everything possible is done to guarantee the continuation of the national company," he said.

A group of three cabinet ministers charged with overseeing the airline's activities gave their support to the Swiss board, emphasising that alliances with other airlines would guarantee the national carrier's survival in a turbulent market.

The main union for ground staff at Swiss said it was "outraged" by the cost-cutting measures and has organised a day of protest outside the airline's headquarters in Basel.

The union described the 3,000 job cuts as "unacceptable".

Suppliers suffer

Other companies, especially Swiss's suppliers, are likely to be affected by the restructuring announced on Tuesday.

Swissport, the global ground and cargo handling company, was the first firm to announce job cuts, which, they said, were a direct result of the Swiss announcement.

It said it would be shedding 350 jobs in Switzerland and 150 posts abroad.

Sacked pilots

Swiss once again voiced its concern over last week’s court decision, which ordered the company to immediately reinstate 169 sacked pilots.

The ruling means redundancies must be applied equally to pilots from Crossair and Swissair, which merged to form Swiss.

“This is a situation which jeopardises the implementation of the new business plan and hence the company’s survival,” said the airline.

"It's time to put the past behind us and look to the future and survival," Dosé said.

The struggling airline revealed it would be entering into negotiations with trade unions.

It underlined that “compromises will be required on all sides if the ambitious goal of the new business plan is to be achieved.”

Swiss tentatively put forward the date of July 15 as a deadline for the conclusion of these negotiations.

Passenger choice

The ailing airline also announced that, in future, it would offer a new "premium business class" service and a competitively-priced economy class on European routes.

The airline said it would charge economy-class passengers for in-flight services like meals on European flights - something many low-cost airlines do already.

The new measures will come into force with the introduction of this year’s winter timetable.

Swiss had already announced plans to spin off its European regional operations into a new low-cost subsidiary called Swiss Express.

Chief executive André Dosé said on Tuesday that these plans would still go ahead.

Alliances

The airline also indicated that a "massively reduced Swiss" might also be more attractive to potential partners.

"The restructuring will also lead to a strengthening of
the company's position in the alliance negotiations," said Swiss.

Previously, Swiss's fleet has been considered too big - and the airline too unprofitable - for it to join a major airline association, such as OneWorld alliance, led by British Airways and American Airlines.

There have also been rumours about a possible link-up between Swiss and Germany's Lufthansa. That would enable Swiss to join Star Alliance, a network of 16 carriers, including Air Canada and United Airlines.

Shares in Swiss were suspended from trade on Monday and Tuesday, while the airline's board unveiled details of the plan to stem daily losses of more than SFr3 million.

Some industry experts say that the latest restructuring was the only route open to Swiss. However, Oliver Sutton of Interavia magazine told swissinfo the ailing airline still had a long way to go.

"Swiss has to get its act together to provide a profitable, attractive airline with good service. At that point, the company could become a potential partner," Sutton said.

"But as long as they offer too much capacity, they won't be attractive for outside bidders," he added.

swissinfo with agencies

Key facts

Around 3,000 jobs are going - a third of the company's workforce.
Swiss posted a net loss of SFr980 million ($727 million) for 2002.
In the first quarter, its net loss was SFr200 million, on revenues of SFr1.04 billion.
The airline blamed Sars, the war in Iraq and the global economic downturn for the poor result.
Swiss said on Tuesday that it aimed to achieve profitability from 2004.

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