The Swissair Group has announced it 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.This content was published on August 30, 2001 - 11:21
The group, which reported a loss of SFr2.9 billion last year, said it would cut its worldwide management staff by five per cent or 250 by the end of the year. The group employs 72,450 people worldwide.
Swissair's chief executive, Mario Corti, told swissinfo that overall he was satisfied with the changes being made.
"I believe that in terms of financial stabilisation measures, the package we announced today, combined with what we communicated earlier, should be enough to put the company into a better financial position by the end of the year."
The group said changes at Swissair and Crossair airlines would result in the majority of the job cuts.
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 reaction, one of the unions said it would fight to maintain as many jobs as possible in the 600 targeted positions among ground staff. It has also demanded an improved social plan.
Swissair unions representing cockpit and cabin crews expressed regret at the planned 400 cuts among their ranks. However, no redundancies are expected from their numbers.
Swissair revenues were up eight per cent to SFr8.1 billion.
Swissair said the group has started "on the road to recovery" and that management is committed to turning the group around.
Economy affects Swissair
Corti is accelerating a cost-cutting programme announced last month as the economic slowdown in the United States and Europe continues to reduce profitability.
The company said change needs to occur more quickly.
In a bid to reduce net debt and fund its exit costs from minority airline participations, Swissair will try to sell SFr4.5 billion in assets, compared to a SFr3 billion programme announced last month. The disposals and asset financings over the next 18 months are aimed at improving the liquidity of the group and strengthening its equity base.
The group said it had signed a memorandum of understanding to sell off a majority stake in its ground handling business, Swissport. It is also planning to sell part or whole of the airport retail business, Nuance.
Corti told swissinfo that he wasn't now planning to sell any other parts of the group.
"We have other businesses that are very closely related to flying and do a very good job," explained Corti. "The main ones being Gate Gourmet, SR Technics and Swisscargo - they are all very fine businesses and I don't anticipate anything along these lines."
In its trading review, Swissair reported an increase of revenues for the Swissair and Crossair airlines of SFr251 million. Excluding that amount, their operating results were broadly in line with last year, the statement said.
Catering business decline
It said a decline in earnings before tax at the group's airline catering business, Gate Gourmet, had been caused by poor trading conditions, continuing investment in an electronic supply platform and the write-off of bad debts in Aerolineas Argentinas.
Commenting on the planned disposal of Swissport, Swissair said that the company had a leading market position in the ground handling industry, with sales of SFr557 million in the first half.
The passenger handling operations for Swissair at Zurich airport will not be part of the divestment and will be reintegrated into Swissair.
For the divestment of all or part of Nuance, an auction will take place by early 2002.
"With these divestments, we generate considerable equity and accelerate the achievement of our objective to reduce the group's net debt," Corti said.
"We are confident that this is also in the best interest of the concerned businesses as they will be able to continue their successful development and growth under the new ownership structures," he added.
Analysts have been sceptical about the planned asset sales, arguing that Nuance was a cash generator for which it would be difficult to receive a good price, given the current difficulties of the group.
swissinfo with agencies
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