ALEXANDER CAMPBELL / BASLE
But embattled carrier still faces major challenges as Oneworld alliance talks and pilots' union negotiations stall
Swiss International Air Lines has reported its first interim results since its birth earlier this year. Although better than expected, the airline faces several problems, including the collapse of talks with its pilots' union, and lack of progress in joining the Oneworld alliance.
Swiss lost SFr450 million ($302 million) on sales of SFr1.7 billion. Both figures were well ahead of the airline's forecasts - "much less red than we planned", says chairman Pieter Bouw - and its ample cash reserves of SFr736 million can sustain its current burn rate of almost SFr2.5 million a day in the short term. The carrier forecasts total losses of SFr1.1 billion for the year and breakeven in 2003.
However, on every side the carrier's operations have run into trouble. Talks with the pilots' union have broken down, with problems over merging pilot cadres from the collapsed Swissair and its one-time subsidiary Crossair. The cost of forming Swiss from the ruins of Swissair was also underestimated. Chief financial officer Thomas Hofmann says the expense "was twice as much as in the business plan. We underestimated the cost of painting aircraft, legal costs associated with Swissair creditors, and starting up new offices."
With the former Swissair Qualiflyer alliance dead, Swiss has been aiming to join the British Airways/ American Airlines-led Oneworld alliance. But since its alliance with American received anti-trust immunity, Swiss has "no progress to report". Bouw says it has not signed any more alliance deals with Oneworld members. BA in particular is proving difficult. "It has been slower than we thought," says chief executive André Dosé.
Technical problems with its BAe Avro RJ85 and RJ100 regional jets and Saab 2000 turboprops have increased cancellations, while other flights have been grounded by maintenance shortfalls. "Internal problems in maintenance have affected all aircraft," says Dosé.
Congestion and management problems at Swiss's Zürich hub have also led to delays and missed connections. Dos‚ is reorganising the company's top management. He has 16 executive vice-presidents - "too many", he says - and plans to interpose three managing directors for finance, operations and commercial affairs.
Analysts are watching Swiss closely. One says: "They are trying to rebuild themselves around a former subsidiary. No airline in history has ever tried this."
Source: Flight International
