teahan
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Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 11:50 am

Hello,

There is a pretty alarming article about Swiss in today’s Sonntags Zeitung (Swiss-German Sunday newspaper). Key points from it:

- Cutback Option 1: Getting rid of 4 long-haul and 4 short-haul aircraft. 2000 employees would hence be laid off.

- Should this prove insufficient, Option 2 would be put into operation: A further 8 (total of 12 including stage1) long-haul and 9 (total of 13) long-haul aircraft would leave the fleet. This would also put the company’s hub operation in serious doubt.

- Extract from a letter André Dosé sent to the company’s pilots: “Time is pushing on. Airlines worldwide have already made cutbacks or are considering them. We are also examining all possible scenarios since we must react to the current times”

- Spokesperson Peter Marthaler adds: “We must carefully consider how we will react to these difficult times. This is not dependant on a war in Iraq. We are expecting very poor figures for January”

- VPOD (Trade Union) leader Daniel Vischer wants clarifications on Swiss’ financial situation on February 6. He also suggests the introduction of shorter working hours (and consequently less pay) for employees.

- This would also have dramatic consequences for Zurich Airport. Up to 25 million SFR for –4/-4 and 87 million SFR for the –12/-13 option.

If you understand Germany, the whole article can be read here:

http://www.sonntagszeitung.ch/sz/szUnterRubrik.html?ArtId=253295&rubrikid=118&ausgabeid=2838

Also on the same topic, the Swiss government last week clearly stated that it would not pour more money into Swiss. The story was covered in several newspapers including the reputable LeTemps. Finally, I guess Swiss managers are hoping for a war in Iraq since it would provide good motive for such cut-backs instead of the “we messed up our original business plan”.

I must say that this is most regretful. Swiss had the chance to start with an almost clean sheet of paper and what do they do? Mess it up! Running a profitable airline from a small market in today’s environment (weak economy, LCCs etc.) is perfectly possible as had been demonstrated by Aer Lingus. You just have to drop your pride.

Kind Regards,
Jeremiah
Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
BA
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 11:54 am

All I've got to say is I really miss Swissair.......

 Sad
"Generosity is giving more than you can, and pride is taking less than you need." - Khalil Gibran
 
teahan
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 11:57 am

BA,

You aren't alone. I certainly haven't (or don't think I ever) will forget about them.

Jeremiah
Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
BA
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 12:22 pm

Teahan, am I imagining things or weren't you part of the Airliners.net Crew?

What happened? I don't see the "Crew" graphic next to your name anymore.

Regards
"Generosity is giving more than you can, and pride is taking less than you need." - Khalil Gibran
 
teahan
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 12:33 pm

BA,

Try refreshing the page and you'll still see a Crew logo next to my name. Or check my profile. Big grin

Okay, back to the topic at hand, today's Sonntags Zeitung also has an interview with Moritz Suter (founder of Crossair) for those interested:

http://www.sonntagszeitung.ch/sz/szUnterRubrik.html?ausgabeid=2838&rubrikid=118&ArtId=253287&ausgabeid=2838

(Again in German, won't translate it now since it is 03:30 over here)

Jeremiah

[Edited 2003-01-26 04:36:23]
Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
ILOVEA340
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 12:39 pm

Yup here we go again.
IMO they should kill Longhaul and cut european down to a former crossair scale. AS much as I love swiss and loved swissair, I don't see a chance for them surviving with just a huge Longhaul fleet and such an unprofitable structure.
I used to fly Swissair SFO-ZRH and it was great.
Damn I miss Swissair  Sad
 
Sabena 690
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 6:16 pm

I must say that this is most regretful. Swiss had the chance to start with an almost clean sheet of paper and what do they do? Mess it up! Running a profitable airline from a small market in today’s environment (weak economy, LCCs etc.) is perfectly possible as had been demonstrated by Aer Lingus. You just have to drop your pride.

Would it be so good to downgrade LX from one of the best airlines of the world to a low cost airline like EI? I don't think that this is the way to go... EI and LX have both the name to be full service airlines, but I think you know very good how 'good' EI is in comparision with LX.

Cutting back services to real proportions for ZRH airport (no megalomania), and join a big alliance (OneWorld) is the way to go I think...

/Frederic
 
sabenapilot
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 6:44 pm

Swiss was originally set up way to big.... I think we can all agree on that.
The Swiss home market simply is not big enough to support an airline the size of Swiss based on their domestic pax numbers alone and contrary to former Swissair, Swiss is not in any global alliance with other airlines like Sabena, AOM, LOT, TAP etc., so they do not automatically get as much transfer pax as before.
In order to attract those strongly needed transfer pax anyhow, Swiss has had to seriously undercut the competitors pricing and has thus been completely unable to make any profit from those transfer pax.
Not enough high yield domestic passengers combined with low yield transfer passengers is a highly explosive mix for any long haul network as we al have seen e few years ago at Swissair and Sabena.

I think the Swiss management has finally understood this deadlock and is now looking at what SN Brussels Airlines (successor to Sabena) is doing in Brussels, i.e. serving most European destinations in a pure point-to-point with a fleet of 32 medium sized jets (Avro 85/100), combined with a long haul fleet of only 3 A330s used exclusively to serve a traditional niche market (Central Africa) rather then the more classic long haul destinations served already by so many other European airlines (NY, Tokyo, Chicago, ...)
For these less common SN long haul destinations the SN Avro fleet is used as feeder network without having to put the overall yield at risk.
Seems this system is working quite well, because SN is currently announcing new destinations, new frequencies and new planes (A319) almost every month.

Of course the problem with Swiss is they do not have such a traditional niche market (contrary to Sabena/SNBrusselsAirlines on Central Africa), so if Swiss cuts all their common (and thus low yield) long haul flights, they will be left with a only handful of isolated destinations for with it will not be easy to seduce pax as these will not automatically think Swiss when going there.
(Think Africa, think SN is a good slogan, but can you come up with anything like that for Swiss???)

Yep, seems the problems for Swiss are only starting...
 
airways
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 6:45 pm

Sorry, but that's the same newspaper which reported some time ago that Zurich Airport will close down Terminal B at Zurich this year. Obviously, that was never an option, the Sontagszeitung was completely wrong on that.

What I would like to say is, the Sontagszeitung is not one of the reliable newspapers for me. There is this story about the Terminal B, and several other articles which were full of errors. Therefore, I would't believe everything in this article.

Fact is, Swiss does still have a lot of things to do. They still have a dispute with the union SwissPilots of the ex-Crossair pilots. It looks like they don't agree to anything. There was a new escalation of that this week when some pilots launched a demonstration at Basle this week. They have pretty stupid ideas right now. After that demonstration, Mr. Dosé sent out a letter to all his employees about the situation with the Swiss Pilots and the other unsolved problems. The letter has also been sent out to the press by Swiss. Obviously, some of the extracts in the Sontagszeitung have been taken out of this letter.

They are also talking about the statement by the Swiss government that they don't want to put more money into the airline. Well, what's the sense behind this statement this week? It was always clear that it would be a one-time investment. Now, it looks like Swiss has asked the government for more money, but that didn't happen. Also for the Swiss management, it was always clear that they will not get more money from the government. So, there's really not much sense behind that statement of the government, it's just for the press again.

The article in the Sonntagszeitung is also talking about major cutbacks which could arrive soon. There is no prove whether this information is correct or not. But generaly, it's good to know that the airline has a strategy for cutbacks in case of new developements. There could be a war in Iraq soon and the economy is still very slow. So, it's necessary to have a strategy for the case that the market is getting bader. I hope every airline has such case studies. Because they will all have to react soon once the market breaks down again. So, I really don't have a problem with the fact that they are willing to make cutbacks when they are needed. That's necessary for every airline in order to survive.

Well, one last thing. I don't know many journalists which are writing positively about Swiss, Zurich Airport and the Swiss avaition industry. Sure, there have been a lot of bad things in the past, but it's shines to be very popular fo them to bash everything about aviation here. That's pretty bad because a lot of people just believe everyting what's written in the newspaper. And we have some popular "analysts" here, which make a living out of bashing Swiss and the airport. For example, as Swiss posted their load-factors for 2002, which were about 71%, all the journalists and analysts told that this is way too low. They wrote that all other airlines had better figures in 2002. I had a look to some other airlines, which published their figures, including LH, AF, KLM, AUA. And all of them were arround 70%...

Michael
http://airsider.net
 
pressclub
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 8:33 pm

When you compare the number of inhabitants of Germany with the number of German (Lufthansa) longhaul aircraft on the one hand, and the number of inhabitants of Switzerland with the number of longhaul aircraft of Swiss on the other hand you see immediately what's wrong with the Size of Swiss...

Pressclub
 
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apuneger
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 9:14 pm

Seems like the Swiss airline managers never learned a lesson from the whole Swissair/SAir debacle, did they? They just started all over again apparantly, or didn't change that much. Too bad. I'm not somebody who wishes that an airline will cease operations or sack people, but if that's the way it has to go with Swiss now, too bad then...

Oh yeah, and I really hope the managers aren't hoping for an war against Iraq just for their own sake. I think such a thing will only prove how stupid and selfish they are: 'oh yes, let's hope so many people will die, so we can back up our bad figures'. Now that'd make me really sick you know...

Pressclub:Now I'd really like to compare those two ratios, you know  Wink/being sarcastic

Ivan
Ivan Coninx - Brussels Aviation Photography
 
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 9:18 pm

Really interesting info. Perhaps this is why so many pundits are envisaging some consolidation of European airlines in the future. BA will also be a bit less nervous - I doubt they have any direct influence on LX decisions, but during Oneworld discussions, it was reported in Airline Business amongst other media, that BA in particular were not happy with the size of LX's fleet/business model, although I'm inclined to believe this comment was a smokescreen to hide the fact that BA aren't terribly excited by the prospect of LHR vs ZRH (even though I personally prefer FRA, CDG or AMS as connecting stations...)

Maybe this is part of the progress towards arranging a more lucrative future (joining an alliance, restructuring the airline) ?
 
donder10
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 9:25 pm

LX could probabarly continue MIA,JFK and maybe ORD based on O&D?Dropping NRT,EZE etc could reduce the need of the M11/343. Are the 343s confirmed on order or just LOI?
 
El Al 001
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 10:23 pm

Rumors at TLV say that Swiss would change from A332 to A321 on the TLV route, operating all the dailies LX253/4/5/6 with a smaller a/c than what was used so far.
That should enable the airline to let go of a single A332.

I should add though, that LX made a 5% increase in operations on its TLV route in 2002, the A332 run daily with 73% load on average.
Changing to A321 may hurt badly the airline performance on this line, mostly because of the cramped C/cl product the A321 has Vs. the A332.

Michael
 
Thomas_Jaeger
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 10:37 pm

@Donder10: 12 A340-300s are on order, the order for a 13th aircraft was cancelled a few weeks ago
Swiss aviation news junkie living all over the place
 
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 11:45 pm

Rumors at TLV say that Swiss would change from A332 to A321 on the TLV route, operating all the dailies LX253/4/5/6 with a smaller a/c than what was used so far.

Weren't they planning to put the A343 onto ZRH-TLV?

/Frederic
 
SR3496
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 11:47 pm

@Pressclub
lol...you compare Switzerland/Swiss with Germany/Lufthansa. How about take a look at the Netherlands/KLM?  Big grin

I don't doubt that Swiss will have to cut back some aircraft. But I think it will be done with a cutback to a longhaul fleet of 15-20 a/c and not to 5-10.
cu in Timbouctou
 
sabenapilot
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RE: Swiss – Major Cutbacks Looming

Sun Jan 26, 2003 11:59 pm

Yes SR3496 and have you heared what Air France wants KLM to do if they want to joint skyteam!? Those 5 longhaul planes for LX could be on the tarmac in ZRH sooner then you think....
 
atwingo
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RE: Swiss – Major Cutbacks Looming

Mon Jan 27, 2003 2:16 am

Donder10,
What about IAD as you failed to mention it?? How are they doing on that route?
 
teahan
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RE: Swiss – Major Cutbacks Looming

Mon Jan 27, 2003 2:29 am

Sabena 690: Would it be so good to downgrade LX from one of the best airlines of the world to a low cost airline like EI? I don't think that this is the way to go... EI and LX have both the name to be full service airlines, but I think you know very good how 'good' EI is in comparision with LX.

Well that’s a pretty good point however I think the figures speak for themselves. EI, just 12 months ago a desperate airline on the verge of bankruptcy is expanding considerably (look at all the new destinations) and making a very considerable profit, probably over €50 million this year? While I personally hate what the company has done, I don’t think I can argue with profitability.

In the coming months Swiss will also face growing competition from LCCs. Look at how bad their GVA flights are doing due to easyJet! It is starting to spread to Zurich with GermanWings (Cologne) and Air Berlin (Dusseldorf/Berlin). I would also expect an LCC (perhaps 1-3 aircraft based there) and one can only imagine what that would do to flights from there and to a lesser extent from Zurich.

Michael/Airsider, again, I don’t disagree with your points however think about this for two seconds. Who was one of the first people to say that Swissair would go bankrupt as early as 2000? That most hated Sepp Moser.

Regarding Terminal B, I thought the option was seriously considered and even reported in Cash?

Jeremiah
Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
Bicoastal
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RE: Swiss – Major Cutbacks Looming

Mon Jan 27, 2003 2:46 am

Each country in Europe doesn't need its own airline. Consolidate or go bankrupt....this is a fact in today's economy.
Airliners.net has many forums. It has spell check and search functions. Use them before posting!
 
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yyz717
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RE: Swiss – Major Cutbacks Looming

Mon Jan 27, 2003 3:05 am

What's incredible is that it looks as though the new Swiss mgmt have not learned a major lesson from the incompetent Swissair mgmt, specifically to move away fro the slavish addicition to new aircraft.

Swissair replaced a middle aged fleet of MD-80's with new A32X aircraft that clearly was a bad financial decision. The MD-80 fleet could have flown for another 15 years. Similarly, Swiss (which is now in trouble) is replacing 13 MD-11 aircraft with 13 A340's.

Perhaps all new aircraft procurements should be deferred until profitability has returned.



I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
gerardo
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RE: Swiss – Major Cutbacks Looming

Mon Jan 27, 2003 3:06 am

Sure, "Cash" reported it. If I would believe, what Cash writes, then:
- the department, where I am working would have been sold at least 5 times to our fearst competitors in the last 3 years
- my employer would not exist anymore

Needless to say, I'm still working for the very same employer....

Only one example to show the credibility of this paper.  Smile/happy/getting dizzy

Regards
Gerardo
dominguez(dash)online(dot)ch ... Pushing the limits of my equipment
 
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RE: Swiss – Major Cutbacks Looming

Mon Jan 27, 2003 3:40 am

@Pressclub
I usually agree with your opinions, but the one concerning the number of longhauls compared to the number of the inhabitants is way too easy.... Ever heard of airlines like Singapore? Would you make the same statement about them as well, as their homemarket is about the same as the Swiss......

I agree it was about time to cutback, but not in the first instance the longhauls, as far as I know is the former Crossair part not significantly smaller than before 9/11 2001, that's the root cause of the problem in my opinion....

Cheers, Thomas
 
donder10
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RE: Swiss – Major Cutbacks Looming

Mon Jan 27, 2003 3:47 am

Cheers as usual Thomas!

YYZ717,I couldn't agree more.Such a young airline buying 343s to replace M11s is profligate especially when there is an argument that they don't need an aircraft in that size gap.
SIN manages to get high-ish yield passengers connecting.SN+SR got relatively low-yield connecting pax.
 
airways
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RE: Swiss – Major Cutbacks Looming

Mon Jan 27, 2003 3:55 am

Jeremiah: Sure you are right about the point that Sepp told us that SR will be bankrupt. But he told this stories since years, even before the hunter-strategy. He has never done anything else than criticizing Swissair and the aviation industry of Switzerland. That has always been his "business". Whatever Swissair did, he told us how bad it is. After all, I have to agree that in the end he was right about the bankrupt. But as I experienced in the past, a lot of the stuff he's telling us is just wrong.

I don't want to go off topic, but just a short note about the Terminal B. As far as I know, it has never been a real option to close down the terminal. And my information source is from the airport directly. I'm sorry to say, but Cash is by far not a reliable newspaper anymore, they are sometimes reporting real stupid stuff. Gerardo gave us an example, I could tell you about many more.

Michael
http://airsider.net
 
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RE: Swiss – Major Cutbacks Looming

Mon Jan 27, 2003 4:22 am

Thomas, I guess the point is that there are too many established hubs surrounding ZRH for LX to profitably start its own - so the need for large numbers of aircraft is somewhat more difficult to defend.

Rgds