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Swiss axes 3,000 jobs

Swiss CEO, André Dosé, outlined the airline's new strategy on Tuesday

(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 shares, which were suspended on Monday and Tuesday pending the announcement, fell more than 16 per cent on Wednesday to SFr7.01.

They have lost nearly two-thirds of their value in 2003. Analysts warned the survival plan might not be enough to return the airline to profit.

"It is not clear whether the measures are enough to make the airline profitable again," said Zurich Cantonal Bank analyst Patrik Schwendimann.

Swiss said it would 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.

Unions denounced the cuts as unacceptably high and threatened to stage protests.

The loss of 34 aircraft will reduce the size of the Swiss fleet to 74 planes, excluding charter jets operating under the "Swiss Sun" brand.

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.

Survival strategy

"The situation for Swiss is the same as it is for all airlines, " chief commercial officer, William Meaney, told swissinfo.

"The good news is that we are addressing issues faster than our competitors because we're smaller and feel the pain sooner," he added.

Aviation analyst Oliver Sutton agreed that Swiss had been forced to act to ensure its survival.

"I think the measures they are taking will enable them to survive. If they hadn't taken these measures, I don't think they would still be here at the end of the year," the editor-in-chief of Interavia magazine told swissinfo.

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

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

Sacked pilots

Swiss 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," said chief executive André Dosé on Tuesday.

Dosé has given the pilots until July 15 to resolve the dispute.

Passenger choice

The 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.

Meaney said many passengers in the low-budget market remain willing to pay slightly more for quality.

"We find that business travellers will pay a little more to go to Heathrow or London City, because of the convenience," Meaney said.

But he added that many budget-airline customers prefer transparent ticket pricing.

"Historically, we gave them free newspapers and food. Now, they are saying 'we would rather choose on board...and if we don't want to eat, we don't want that built into our ticket price'."

The new measures will come into force with the introduction of the winter timetable at the end of October.

Swiss Express

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

Dosé said that these plans would still go ahead.

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.

swissinfo with agencies

Key facts

Around 3,000 jobs are going - a third of the company's workforce.
The airline is also cutting 34 aircraft.
Swiss hopes the cuts will lead to savings of SFr1 billion.
Swiss posted a net loss of SFr980 million ($727 million) for 2002.
Its net loss in the first quarter was SFr200 million on revenues of SFr1.04 billion.

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