André Dosé and the management of recently launched Swiss are confident they can avoid the pitfalls that caused its predecessor's demise

When flight LX 2991 departed Basle for Zurich early on 31 March, it also marked the official take-off of Swiss - the new national carrier of Switzerland and successor to the fallen Swissair.

Chief executive André Dosé and the staff he brought with him from Crossair - Swissair's erstwhile regional partner - frequently made the point that newly born Swiss is different from its predecessor in many ways. Key among the differences they emphasised during the carrier's launch was that Swiss would begin life as a well-capitalised airline.

The SFr2.7 billion ($1.64 billion) which local governments and businesses invested in Swiss will bring stability for the rocky early days, a point of particular importance, as the lack of such finances expedited Swissair's demise. "We've got the resources to help us fly into and survive a strong headwind," says Dosé.

New brand

To illustrate that more than the carrier's name has changed, Swiss has undertaken an aggressive branding exercise and made it the focal point of its launch.

The branding experiment, which was led by Tyler Br–l‚, creator of the influential style magazine Wallpaper*, included the design of a new, simple but stylish livery and a revamping of the company's inherited aircraft interiors and in-flight products, premium lounges and city ticket offices.

The changes Dosé is bringing to Swiss are, however, more than just cosmetic. The carrier has also made dramatic moves in the fleet area, announcing that it will retire its fleet of 13 Boeing MD-11s and replace them with Airbus A340-300s to complement the carrier's 13 A330-200s and short-haul fleet of 104 regional and single-aisle aircraft.

Swiss also has signed a comprehensive codeshare deal with American Airlines and publicly set its sights on full accession into the oneworld alliance. The latter will take more time, as it will require bilateral agreements with each of oneworld's seven other member carriers.

The business plan for the new national flag carrier also calls for capacity to be reduced by 30% - both by frequency cuts and use of smaller aircraft - with the remaining capacity used to promote higher yields. Replacing the notion of Zurich as a major connecting complex, will be a vision of business passenger-friendly point-to-point service. As a result, Swiss plans to reduce its percentage of transfer traffic from 60% to 45%.

The executives at Swiss are confident these changes will mean the difference between the disaster that befell Swiss and the success they promise to deliver. The business plan calls for an initial year loss of SFr1.1 billion on revenue of SFr3.2 billion, with break-even to come in 2003 on turnover of SFr5 billion. Dosé says the early returns are encouraging, pointing to above-plan results in European traffic and yield, and good auguries for intercontinental traffic also to exceed plan.

Industry analysts, however, still have doubts about the long-term viability of the carrier, pointing out that the size- and competition-related problems that drove the previous management to embark on its disastrous expansion programme still remain in place.

Swiss appears undaunted. Vice-president for sales and marketing Arjen Pen rejects the oft-cited theory that the future of European aviation will belong only to those carriers with the critical mass to sail through rough economic weather - namely Air France, British Airways and Lufthansa. "You won't see only three major airlines in Europe over the next 100 years. That's absolutely not true," he asserts.

Reduced capacity

Key to the success he predicts for Swiss is its newly minimised capacity. "We've reduced the airline to its natural demand level," he says.

Others are not sure they have. JP Morgan analyst Chris Avery believes the carrier's fleet remains larger than it should be. "One of Swissair's problems was a long-haul fleet that was too big for its hub," he says. "This remains the case: Zurich cannot sustain 26 widebody aircraft." He further adds that Swiss's short-haul operation is "vulnerable", especially as long as it is not part of an alliance.

It seems alliance membership could be achieved soon. Now it remains to be seen if Dosé and his team can effectively overcome their new airline's long-standing problems.

Source: Airline Business