Swissair losses dominate business headlines

Swissair's chief executive, Mario Corti, addressing the company's half-year results press conference Keystone

Results from the Swissair Group stole headlines over the past week and kept analysts busy. Numbers from Credit Suisse and a court ruling for Sulzer Medica in the United States also seemed to bring the summer holiday mood to a halt.

On Thursday the Swissair Group announced plans to shed 1,250 jobs and sell some of its major assets after reporting a first half loss of SFr234 million ($140 million) compared with a profit of SFr3 million during the same period a year earlier.

The group, which reported a loss of SFr2.9 billion last year – for the full year – said it would reduce its worldwide management staff by five per cent or 300 by the end of the year. The group employs 72,450 people worldwide.

A statement blamed the expense of SFr251 million set aside for Germany’s LTU group – in which Swissair has a significant stake – for the first-half loss.

In a bid to reduce net debt and fund its exit costs from minority airline participations, Swissair said it would try to sell SFr4.5 billion in assets, compared with a SFr3 billion plan announced last month.

Memo of understanding¶

The group said it had signed a memorandum of understanding to sell off a majority stake in its ground handling business, Swissport. It also plans to sell part or all of the airport retail business, Nuance.

Credit Suisse Group, Switzerland’s second largest bank, announced on Wednesday a further round of cost-cutting at its investment bank Credit Suisse First Boston (CSFB) as it posted a 23 per cent drop in second quarter net profit.

On Wednesday, CSFB vice chairman Richard Thornburgh noted that CSFB had cut about 3,000 positions since last year’s acquisition of the brokerage firm Donaldson, Lufkin and Jenrette. Under the recently appointed chief executive John Mack, Credit Suisse seeks further savings.

An announcement on cuts will be made to CSFB staff next week, Thornburgh said, without giving details.

Credit Suisse said second-quarter net profit was SFr1.288 billion ($775 million), compared with net profit of SFr1.675 billion in the second quarter of 2000 and SFr1.428 billion in the first quarter of 2001.

Sulzer Medica case¶

Meanwhile a federal judge in the United States gave preliminary approval to a settlement agreement put forward by the Sulzer Medica company of Winterthur in connection with a recall of faulty hip implants.

Earlier this month, the company proposed a package estimated at $780 million (SFr1.3 billion) and asked a US district court to effectively collect all pending lawsuits to meet patients’ claims “quickly and fairly”.

However at state level a jury in Corpus Christi, Texas awarded $15 million to three elderly women who had to have implants removed. Lawyers said it was unclear in the light of the federal ruling whether or not those damages would be validated.

More results came on Thursday from the world’s largest producer of crop chemicals, Syngenta of Basel, as it reported that it expects $150 million (SFr250.65 million) in savings this year, $60 million more than previously estimated.

Syngenta closes facilities¶

Company chief executive officer Michael Pragnell said Syngenta was on course to make $525 million in savings by 2004 as it closes 10 manufacturing sites and six technology centres over the next three years. The company’s net profit for the first six months of the year was $400 million, up $1 million over the comparable period in 2000.

News of expansion came from Nestlé, the world’s biggest food group, as it said on Thursday that it was negotiating an alliance in the North, Central and South American dairy markets with New Zealand’s newly-formed Fonterra Cooperative Group.

A Nestlé statement said the aim was to form a number of joint ventures that are still subject to regulatory acceptance.

On Friday the Federal Statistics Office revealed that inflation was running at just 1.1 per cent in the year to August, down from the 1.4 per cent figure seen in the year to July.

Analysts had expected a rate of between 1.6 to 1.7 per cent.

The latest figures backed up hopes that the Swiss National Bank would be able to cut interest rates soon.

by Tom O’Brien