The national carrier, Swiss, has said it can breathe more easily after receiving a SFr50 million guarantee from its Oneworld alliance partner, British Airways.This content was published on March 23, 2004 - 08:59
This guarantee allowed Swiss to clinch a SFr50 million ($40 million) credit agreement with London-based Barclays Bank earlier this month.
Announcing its annual results on Tuesday, Swiss said it had enough liquidity to keep flying but kept quiet about who might be replacing former CEO, André Dosé.
Dosé stepped down on March 10 after becoming entangled in an investigation into the Crossair airline crash two years ago that left 24 people dead.
"According to current planning, the liquidity level is expected to stay above SFr250 million even at its lowest point in the second quarter of 2004, with expectations of further increase thereafter," said Swiss in a statement.
The airline said talks with banks to sign a much-needed credit line were taking longer than expected.
But Swiss added that there was now less pressure because it had been able to use the SFr50 million credit line made available when it joined the Oneworld alliance late last year.
The carrier said it had a foundation for a solid future and that it was in a better financial position thanks to progress in restucturing, the gradual recovery in the markets and careful cash management.
The operating loss for 2003 was SFr498 million, an improvement on the 2002 result of SFr909 million.
Liquid assets of SFr503 million at the end of 2003 were also above expectations, said the carrier.
Zurich Cantonal Bank analyst Patrik Schwendimann said he was not surprised by the results or by the fact that no new CEO had been found.
"As expected, the credit needed of between SFr300 million and SFr500 million has not appeared. Therefore, Swiss has used the credit that was guaranteed to them by British Airways last autumn," Schwendimann told swissinfo.
"[The situation] would be less worrying if the credit needed was found as soon as possible," he added.
Geneva-based financial analyst François Savary warned that although the BA credit could be interpreted as a positive sign, there were still other factors to take into account.
"Swiss must clearly define its strategy and become more efficient," he said.
The carrier's upbeat prognosis for the coming year forms part of an ongoing effort to regain the faith of its customers and investors.
Trust in the airline has been battered by the recent resignation of its founding chief executive, Dosé, who quit in the face of a judicial probe into an aircraft accident involving Swiss’s predecessor, Crossair.
Dosé was in charge of Crossair at the time of the accident.
Investors were eagerly awaiting news of whether chairman and acting CEO Pieter Bouw had made any headway in his search for a new chief executive.
Newspaper commentators and analysts have fretted about the potential difficulty of finding a replacement for Dosé.
Any candidate will need aviation-industry and financial experience,
and the political savvy to hold what is one of the most closely-scrutinised jobs in Switzerland.
They will also need to be prepared to take charge of an airline that remains in the midst of a turnaround.
Where’s the cash?
Swiss still has to conclude its long-running search for extra operating credit, needed to boost the carrier’s finances, which continue to be drained by a negative cash flow.
The carrier has been losing money as it shifts its focus away from its long-haul business to its European network, where it has introduced low-cost fares to compete with budget airlines such as easyJet.
Swiss confirmed preliminary figures released last month that it had trimmed its net loss last year to SFr687 million from SFr980 million in 2002.
Analysts say the results confirm that Swiss failed to capitalise on last year’s aviation industry upturn, unlike many of its competitors.
swissinfo, Jacob Greber in Basel
Swiss said it had reduced its cash-burn rate in the fourth quarter, when it used SFr152 million to stay airborne.
The airline proposed cutting the nominal value of its shares to SFr18 from SFr32 previously.
This is to improve its balance sheet and prevent net equity from falling below half its share capital.
Swiss has yet to make a profit since it took to the skies in April 2002.
It was formed out of the remains of Swissair and the regional carrier, Crossair, with a SFr2.7 billion injection from the government and Swiss firms.
Operating loss for 2003: SFr498 million.
Liquid assets at end of 2003: SFr503 million.
2,530 full-time positions were axed last year.
The route network was reduced by 21% in 2003.
The fleet was slimmed from 111 to 83 aircraft.
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