The national airline, Swiss, is poised to announce a decision this week on whether to link up with a larger partner.This content was published on September 22, 2003 - 12:43
On Monday, Swiss suspended its shares until 1200 GMT on Tuesday. The carrier declined to comment, but said it would hold a press conference on Tuesday where it will announce “key decisions”.
Swiss is understood to be in the process of deciding whether to join the “oneworld” airline alliance, headed by British Airways and American Airlines, or team up with the German carrier, Lufthansa.
A third option is that the airline remains independent.
An alliance has long been mooted as a way for Swiss to keep flying, after struggling to survive industry overcapacity and falling passenger demand.
After launching in April last year, Swiss has been steadily losing money. It is currently in the midst of a massive restructuring plan that will see its staff and fleet cut by a third.
The flagship carrier has also moved downmarket, launching a new low-cost fare structure across its European network.
Investors, who have seen their shares in Swiss fall by almost a fifth since the start of the year, have welcomed the move, which takes effect during the autumn.
Shares in Swiss closed on Friday at SFr16.85.
Most analysts have lamented the carrier’s failure to join one of the big global aviation alliances – a move that would help the carrier cut costs and give it access to a global customer base.
Swiss also needs around SFr500 million ($368 million) in cash to secure its balance sheet.
Media speculation in recent months has focused on a possible merger with Lufthansa, or a deal with “oneworld”.
The airline’s management and board are said to be narrowly split on the issue.
Both options are likely to mean Swiss will be forced to cut its route network further, although the German option is said to require more sacrifices.
An alliance with Lufthansa may involve a full takeover.
Swiss has faced massive financial problems since it was
created out of the defunct Swissair in March 2002. It lost SFr980 million in its first year of business.
Swiss has blamed its ongoing financial troubles the weak global economy, the SARS crisis in Asia, the Iraq war, and major changes in European air travel due to the increasing influence of low-cost carriers.
Swiss is in the process of dramatically scaling back the size of its operations. Last week, it cut its flights to Washington DC, and in October is due to cut a quarter of its destinations.
swissinfo, Jacob Greber in Zurich
Swiss could either join the “oneworld” airline alliance, headed by British Airways and American Airlines, or team up with the German carrier, Lufthansa.
The latter alternative would likely involve a full takeover by Lufthansa, forcing Swiss to cut many of its routes.
Swiss is struggling to stay airborne, and urgently needs a cash injection of SFr500 million to secure its balance sheet.