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Swiss wields heavy axe

Plans to purchase Airbus A340s could be put on hold by Swiss (Swiss)

Switzerland's troubled national airline, Swiss, will shed at least 3,000 jobs in an effort to save SFr500 million ($376 million) by the end of year.

Union officials unveiled the carrier's decision to slash a third of its workforce, which came after a board meeting on Monday.

Union representative Daniel Vischer told Swiss television of the cuts after a closed-door meeting with company executives on Monday evening.

"Swiss is in the same position as Swissair in October 2001, when the airline's aircraft were grounded for two days," he said.

"This will be a fight for survival for the company," he added. "This will be worse than feared."

Vischer added that the job losses would extend far beyond the ranks of Swiss, saying 2,000 other jobs were under threat in companies that worked for the airline, such as SR Technics and Gate Gourmet.

The Swiss economics minister, Joseph Deiss, said on Tuesday he was "shocked" to hear of the job cuts.

"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," Deiss said.

The cabinet is expected to respond formally to the airline's new business plan after its weekly meeting on Wednesday.

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

Reduced fleet

The airline's chief executive, André Dosé, is also expected to announce on Tuesday wide-ranging cuts to the airline's long and medium-haul network.

Susanne Erdoes, head of the Union of Office Workers, said the board had decided to cut the number of aircraft to 74 from 109.

However, plans to reduce capacity have been complicated by a court decision last week, which Swiss said would prevent it from implementing the necessary cutbacks.

The airline was ordered by a court on Thursday to immediately reinstate 169 sacked pilots.

It also faces difficulties associated with its fleet renewal programme. Swiss was due to take delivery of a new Airbus A340, the first of twelve, by the end of the month - a move that the airline says is now in doubt.

Financial worries have also forced the Swiss government - which owns 20.4 per cent of the carrier - to consider issuing a "letter of comfort" in order to calm jittery investors.

Long-haul cuts

Hamstrung by a lacklustre global travel industry and a saturated aviation market, the 14-month-old airline is battling for survival.

Launched following the 2001 collapse of Swissair, the new national carrier was modelled as a classic "hub-and-spoke" operation, in which small and medium-sized aircraft serving regional European cities would funnel passengers to long-haul flights departing from Zurich and Geneva.

However, the airline's regional network has been responsible for some of its largest operating losses, while the long-haul network has been buffeted by the war in Iraq, the Sars pneumonia virus and a stalling global economy.

Swiss recently announced it would spin-off its regional network by creating a new low-cost carrier, to be known as "Swiss Express".

Cloud over Dosé

Investors are now carefully watching how Dosé attempts to control losses linked to the long-haul network, which has already been trimmed in recent months.

The seemingly never-ending stream of negative headlines about Swiss has also fuelled speculation about Dosé's position.

In its most recent editorial, the "NZZ am Sonntag" newspaper listed the mistakes made by the airline under Dosé's stewardship.

"You have to ask yourself, whether Dosé isn't the wrong man to put the airline back on course," questioned the paper.

swissinfo, Jacob Greber in Zurich

Key facts

Union officials have confirmed that national carrier Swiss will shed at least 3,000 jobs - a third of the company's workforce.
Up to a third of the airline's long and medium-haul fleet could also be put out of service to stem losses.
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 company blamed Sars, the war in Iraq and the global economic downturn for the quarterly result.

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