teahan
Posts: 4988
Joined: Sun Nov 21, 1999 11:18 pm

Swiss - Slim Down Or Die

Sun Sep 29, 2002 10:07 am

Swiss - Slim Down or Die

Hello,

As per usual, Switzerland’s Sunday press has plenty of not so positive [major understatement] articles about Swiss’ future. This is one from LeMatin, translated by me, and definitely worth a read:

***Translated quote from LeMatin***

Swiss: Slim or Die

The bankruptcy of Swiss wasn’t enough. The new airline is flying in circles and the government refuses to make a decision. Silent savings plans against a major reduction of the long-haul fleet, the duel between prestige and modesty is raging.

The accounts of the Swissair debacle have yet to be sorted one year after the bankruptcy was announced. With more than 2 Billion of government money invested in the adventure, one expected to at least bear the fruits of a new airline with full pockets. But no, true courage was lacking in the dimensioning of Swiss and yesterday’s political choices are once again causing tremors today.

Swiss is losing 2 million a day, the pilots are fighting, the service isn’t great, the planes frequently break down, the large fleet is preventing it from joining an all important global alliance. In these conditions, how can one break-even at the end of 2003 without making serious cutbacks. Without these, the capital of the new company would dilute with fatal consequences.

Swiss managers are taking that exact question very seriously. However, taking simple stops such as cancelling the plans for a new uniform won’t be enough. André Kudelski - Swiss-French administrator of Swiss confirms that employees will only be hit if the ex-Crossair pilots continue to be so demanding.

Swiss versus Crossair, the war without an end in sight
This menace is central to the problem. Even the Swiss government does not dare face the subject, instead it contents itself with reports from Swiss’ management. The urgent need for arbitration between the Swissair side and Crossair side really doesn’t need to be demonstrated more clearly.

The pilots war isn’t going to blow over either. On the Crossair side, one claims a “monumental mobbing” according to the terms of an ex-manager of the regional airlines. On the opposite side, the Swiss pilots do not hide their superiority. For example, one captain said “the Swissair pilots are more reliable and definitely more profitable”. To operate a long haul, 10 Swissair crews are needed compared to 13 Crossair crew.

This confrontation also changes the fundamental strategy that should lead Swiss to profitability. For the moment, the management are holding on to the sizeable long-haul fleet inherited from Swissair. They claim that savings are to be made on the European side. This angers the Crossair side. According to them, one must drop the expensive prestige of long-haul flights.

Even the statistics are read through this antagonism. A Basel-Brussels flights with a load factor of 38% (full-fare tickets) is more profitable than a Zurich-Bangkok with a load factor of 92% (discount tickets). For André Kudelski, it is not yet the proof that long-hauls are not profitable, in fact it is the opposite.

Prestige side versus that of modesty, slimming down the wings for Swissair employees or Crossair employees: the equation isn’t being ignored by anyone, especially not the tax payers who are indirectly the major shareholders in Swiss. Then again, the government has to give its opinion before it is too late or before a war in Iraq produces a poor excuse to restructure our dear airline.

Interview: André Kudelski
“I believe in it”
André Kudelski, 42, businessman from the Canton of Vaud, seat on Swiss’ board of management since the 6th of December 2002.

-- The objectives for 2003, aren’t they too optimistic?
-- The 2003 objectives were set in the autumn of 2001. The current management has to achieve these targets, while knowing that the parameters evolved positively or negatively. The potential for a war in Iraq is another unknown, which would send the results into turmoil. I am convinced 2003 will be a determining year for Swiss, and I am certainly not pessimistic.

-- The condition of success?
-- Our concept is just being formulated. I cannot reveal anything today. Swiss will do it before the end of the year-

-- Are you going to reduce the long-haul fleet?
-- It isn’t a major problem, in fact it is the opposite. It is in the long-haul sector that profitability is at its highest. We have already reduced the long-haul fleet by 30% compared to Swissair, considerably more than competitors.

-- Until when will you be able to reduce prices?
-- For the transition team, the target is to maximise cash, sometimes at the cost of prices. The aim is to maximise long-term profitability.

-- The entrance of Swiss into an Alliance is skidding. Because of too many long-hauls?
-- I don’t think negotiations are skidding. There certainly are concessions to be made but there is also a lot to gain.

-- If Swiss isn’t too big then how can you explain the indiscretion evoking the management’s plans for cut-backs?
-- The publications are not concurrent with what I know. A plan for cutbacks is being studied in case not agreement if come to with the ex-Crossair pilots since many regional flights would be loss making.

-- But also ?
-- As I said, we are improving our yields. We are also looking to reduce our non-crew operational costs.

-- Aren’t you acting under pressure from the ex-Swissair people?
-- I find that statement shocking. The Swissair people agreed to make many sacrifices, while others totally misunderstood a situation. Crossair survived because of customers brought by Swissair.

-- What do you make out of the failed merger of two company cultures?
-- It is normal that the sequels of traumatism remain. A lot of work and goodwill is still needed to overcome these.

Interview: Sepp Moser
“I don’t believe in it”
Sepp Moser, Zurich journalist, long-time specialist in air transport matters.

-- Since the very beginning, you claimed Swiss wouldn’t succeed. An instinct?
-- It isn’t me who said that. Many experts and even several Swiss managers confirm it. The new company is only built on the obsession to maintain the prestige of a long-haul network (40 destinations), totally oversized for Switzerland. With the population taken into account, the Swiss’ long-haul fleet is five times the size of Lufthansa’s. It is a bit like if you built a 1000 bed hotel on the shores of the black sea.

-- A mistake only made in Switzerland?
-- Many European airlines have opted for modesty and are doing well. To fill long-haul aircraft, one needs an airport that works well as a hub bringing foreign customers. Despite the over-priced investments, Kloten really doesn’t compete with other major European hubs. Therefore, Swiss has to fill its aircraft by lowering prices.

-- Will the savings planned by Swiss be enough?
-- The long-haul fleet would have to be drastically reduced and the airline will have to concentrate on niche regional traffic, like Crossair. But the antithesis is occurring, the ex-Swissair people are setting the reules and are trying to make savings from the regional traffic which will hit only ex-Crossair personnel.

-- The war between pilots is symbolic of the failure to integrate both airlines. Dangerous?
-- Safety is not put into cause in the sense that Crossair and Swissair pilots do not fly together. However, it is the costs problem. On average, the Swissair pilots are twice as expensive . The climate is very unhealthy for the company: those who are mislead are those who previously succeeded. Instead of wanting to leave Swissair die, one wanted to reanimate it and implant the corpse into Crossair. The risk is even greater.

-- Will the saviour come come from the integration of Swiss into OneWorld?
-- In the current negotiations, British Airways are firm. Swiss will never get in unless it reduces its long-haul fleet. The English have adopted the opposite of Swiss’ strategy for the past two years, fly fewer people but get more yield.

***(unquote)***

To read the whole article in French, go to the following URL: http://www.lematin.ch/home/actualite/15325.html

Admittedly, it is easier to criticise Swiss than to praise them and I would definitely take that last bit (Sepp Moser interview) with a pinch of salt. He has been a long-time basher of anything Swissair and now anything Swiss. However, it is obvious that Swiss does face many problems:

-- A cut back plan is being formulated. This must mean something.
-- Losing two million Francs (€1.33 million) a day. Yes it is lower than expected but nevertheless is a lot.
-- Pilots dispute. Whatever the management claim, it certainly isn’t going to solve itself.
-- Problems with OneWorld negotiations. Even the reliable FT confirmed that BA won’t leave Swiss join unless the long-haul fleet is reduced.

What do you think?

Jeremiah

http://www.groups.yahoo.com/group/Swissair
Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
dc863
Posts: 1466
Joined: Fri Jun 04, 1999 10:52 am

RE: Swiss - Slim Down Or Die

Sun Sep 29, 2002 2:42 pm

The Swissair/Crossair merger reminds me of the BOAC/BEA merger in 1973. Pilots from from both camps looked down on each other. However, it took some years around 1982/83 before drastic measures were took to reorganize the bloated carrier into a viable money making airline. Swiss needs a chance to survive and if it can it will be a carrier that can have a prosperous future. For now no doubt things must look awfully gloomy for the employees.
 
danialanwar
Posts: 420
Joined: Fri Mar 16, 2001 6:13 pm

RE: Swiss - Slim Down Or Die

Sun Sep 29, 2002 10:47 pm

I dont think there's anything greatly wrong with Swiss having a large intercontinental network. However, somewhere Swiss needs to have a competitive advantage and that's what's missing. They cant compete on size since Swiss is way smaller than Lufthansa and British (in absolute terms, and that what counts). So you'll have to find yourself a niche. You cant go cheap (wages are too high in Switzerland plus you dont want to loose the image of a safe & good airline). Thus you'll need to be really good at flying people for region A via Zurich to region B; you need to do that better than anybody else.

So where is Swiss strong? The Middle East to Europe / USA ... they may have some traditional routes, BUT both Lufthansa and British fly to more destinations on each side and more frequently.

Far East? Similar story there, just add more competition from local airlines (SIA, Thai). Swiss does not even make it nonstop into Singapore!

USA / Canada ...the network of direct destinations is rather thin, too!

South America ... ditto

So that leaves Africa. Swiss has quite an extensive network there so that may be worked upon. But they need to hurry before Air France and SN Brussels (or whatever they are called) slice up the cake.
Best Business Class: Royal Brunei. Best Economy: Singapore Airlines. First: please send money first!
 
Guest

RE: Swiss - Slim Down Or Die

Sun Sep 29, 2002 11:01 pm

I don't really have any intelligent comments to make, as I don't know anything about the Swiss aviation scene.

But the article is certainly very interesting, thanks for posting it! I also read an article in the FT regarding Swiss's difficulty negotiating with BA.
 
Bicoastal
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RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 12:06 am

This is more evidence that European airlines need to consolidate or die a slow death. British Airways, Lufthansa and Air France will be the major European airlines with the others becoming feeders and filling niches in medium and longhaul routes.
Airliners.net has many forums. It has spell check and search functions. Use them before posting!
 
donder10
Posts: 6944
Joined: Sun Oct 21, 2001 5:29 am

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 12:08 am

What is the official EU stance on state aid to carriers?Hasn't Switzerland agreed to follow it too?
 
dtswi
Posts: 81
Joined: Wed Aug 29, 2001 10:34 am

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 5:56 am

politics, politics, politics...

The half year results indicate a positive trend.Let Swiss express itself ! What a typical swiss journalists' negative wave...
It is clear that Swiss cannot make profits yet. But the goal are set and the means used for them make sense to me.
 
swiss-airplane
Posts: 557
Joined: Wed May 03, 2000 3:08 pm

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 6:04 am

I also think that we should wait and we should give a chance to swiss. It's a great airline and they have a nice concept.. I think they will do well and I really hope the best. It's popular to write negative stories about Swiss in the newspapers... to bad about that! I will support Swiss whenever it's possible. And there are some people in Switzerland which have problems with Swiss and they still had the same problems before with Swissair.
 
dtswi
Posts: 81
Joined: Wed Aug 29, 2001 10:34 am

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 6:17 am

politics, politics, politics...

Let Swiss express itself. Half FY results are much better than expected and the goals and the means used for them make sense to me. They have been discussed exhaustively, with input from experts of the branch and the Swiss Confederation.

Of course we cannot expect Swiss to show benefits as of yet. But it is too early to dare any negative or positive projection !
 
teahan
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Joined: Sun Nov 21, 1999 11:18 pm

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 6:22 am

Dtswi and Swiss-airplane,

Nobody is enjoying writing/posting negative views on Swiss, however some problem are pretty damn obvious. These will not simply go away and perhaps have to be faced instead writing them off as mere people who "like to post crap".

The problems have been listed above and here they go again:

-- A cut back plan is being formulated. This must mean something.
-- Losing two million Francs (€1.33 million) a day. Yes it is lower than expected but nevertheless is a lot.
-- Pilots dispute. Whatever the management claim, it certainly isn’t going to solve itself.
-- Problems with OneWorld negotiations. Even the reliable FT confirmed that BA won’t leave Swiss join unless the long-haul fleet is reduced.

Jeremiah

http://www.groups.yahoo.com/group/Swissair
Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
Guest

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 6:23 am

Hi

I was interested to read the replies so far...just wondering now why Swiss journalists would be so hostile towards a new national airline...is there a hidden agenda (i.e. negative news stories sell more) or is there genuine pessimism amongst the Swiss public?

Thanks

By the way, I'm flying Swiss in February LHR-ZRH-EZE!
 
teahan
Posts: 4988
Joined: Sun Nov 21, 1999 11:18 pm

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 6:27 am

Capt.Picard,

Well it is probably somewhere 1/2 way between a hidden agenda and genuine pessimism. It also depends what part of Switzerland you look at. The Swiss-French tend to be a little bit more hostile than the Swiss-Germans.

BTW, why did you chose Swiss? Airline itself? Convenience? Simply the Price?

Jeremiah

http://www.groups.yahoo.com/group/Swissair
Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
dtswi
Posts: 81
Joined: Wed Aug 29, 2001 10:34 am

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 6:28 am

Teahan,
Having problems does not mean there is no solution. Every airline and every company has problems and must solve them.

This just makes life challenging and more exciting.
 Big grin
 
Guest

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 6:57 am

Hi Teahan

As a student, the choice always comes down to who's cheapest, and in this case, it was actually Swiss. I'm happy-new airline, new city (ZRH) and new aircraft (MD-11). The flight also stops in Sao Paulo which is fine by me!  Big thumbs up

Thank goodness I can now fly to Argentina with someone other than BA!

Rgds
 
teahan
Posts: 4988
Joined: Sun Nov 21, 1999 11:18 pm

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 8:05 am

Capt.Picard,

Should have guessed. How much did you pay if you don't mind me asking? There are stories of Swiss' long-haul yields being extremely low due to the very low prices.

Jeremiah
Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
swiss-airplane
Posts: 557
Joined: Wed May 03, 2000 3:08 pm

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 3:52 pm

Teahan:

thank's for your posts.. I just want to say that Sepp Moser for example criticed always Swissair, but the was a former Swissair pilot and got angy with this airline. I'm not sure if he ever will have some positive points about Swiss.
smile
 
Guest

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 6:09 pm

Hi Teahan

Total price came to 474 pounds......from experience, I can confirm this is VERY cheap for a flight to EZE....certainly cheaper than LH, BA, AF, and IB who also fly there.

Mind you, BA are currently offering LHR-EZE for 489 pounds, usual asking price for them is about 650+.

Cheers
 
groobster
Posts: 254
Joined: Tue May 15, 2001 12:37 am

RE: Swiss - Slim Down Or Die

Mon Sep 30, 2002 9:24 pm

I flew SWISS from MAN-BSL-MUC (same route back) and I found them to be excellent value. Just £204 from Opodo.co.uk, and I booked it a week before departure too.

I hope they do well, I was impressed with the service I received.
Next flights: Nothing
 
User avatar
yyz717
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Joined: Mon Sep 10, 2001 12:26 pm

RE: Swiss - Slim Down Or Die

Tue Oct 01, 2002 2:07 am

They need to cut costs, drastically.

They also need to stop their snobbish, teutonic preference for only the newest aircraft. The MD-11 does not need to be replaced by the 343, for instance. Cancel the 343 order and operate the MD-11 until 2010 or so.
I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
rey777
Posts: 169
Joined: Fri Apr 20, 2001 4:51 am

RE: Swiss - Slim Down Or Die

Wed Oct 02, 2002 5:32 am

Hello !

Very interesting post indeed ! And I now the question because my fiancé is F/A on SWISS (ex-Crossair F/A). Every day she tells me stories about problems between ex-Crossair and ex-Swissair F/A !
By the way... Huge turnover in old Crossair F/A...

So sad...

Rey777
 
pothiabs
Posts: 114
Joined: Fri May 25, 2001 9:39 am

RE: Swiss - Slim Down Or Die

Wed Oct 02, 2002 6:41 am

Management thought they could get away with brainwashing both airline groups' employees and setting them up against each other. Up to the bankruptcies this strategy turned out to be a winner. (divide and rule)
Now the rebuilding has begun and a strong common effort is needed in the interest of everybody. But both employee groups have been driven too far apart.


Same situation at DAT, by the way.

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