Swiss looking to cut costs

Swiss chairman Pieter Bouw has warned the airline still has to cut costs by 10 to 15 per cent to be competitive on the international market.

But, he said, cost-cutting measures could only be implemented after Swiss had renegotiated contracts with its suppliers.

Bouw told swissinfo he regretted having to cut staff at Swiss and reduce the size of the fleet in February. He added that the decision to modify the Eurohub strategy at Basel airport and cut capacity by one third had not been easy to take.

“It was absolutely necessary to give us a stronger financial base and pursue our operations,” he said.

Last week, Swiss announced it was axing a further 700 jobs and getting rid of 20 aircraft, used mostly on regional routes.

The move was justified by the collapse of the European market and the effects of competition from low-cost carriers.

Customer service

The chairman said now Swiss must look for other savings to be competitive, but also continue to offer good customer service. “That is where we can still stand out from the crowd,” he told swissinfo.

Bouw said that the airline had already begun to generate serious savings on its cost structure.

“We were able to cut down on some costs simply by renegotiating contracts with the pilots and the leasing company,” he said. “Now, we have to sit down and talk with our partners to find other ways of reducing our overheads.”

Bouw said the company’s goal would be to cut costs now by at least another ten per cent. “We have to improve efficiency and productivity,” he said.

The chairman added that the airline would now focus on service contracts to lower its overheads, rather than consider fleet and personnel reductions.

“It won’t be easy to renegotiate contracts, since many suppliers such aircraft builders, engine manufacturers, airport owners and air traffic control services have a dominant market position,” he told swissinfo.

Bouw said the main difficulty would be convincing service providers and suppliers such as caterers to cut costs while maintaining quality.

“We will have to prove to them that cutting costs by ten to 15 per cent will not be detrimental to the quality of service.”

swissinfo, Georges Baumgartner in Tokyo