25th June 2003 at 05:41Well, I alluded to it a couple of weeks ago, and confirmation came forth at a restructuring announcement on Monday...
---First, from BBC Online----
Swiss International Air Lines has confirmed that it plans to cut about 3,000 jobs - about a third of its workforce - as it strives to survive the turbulence rocking the global aviation business.
The company, born last year out of collapsed carrier Swissair and regional subsidiary Crossair, has been losing about 2 million Swiss francs ($1.5m; £900,000) a day.
Now it has decided that massive job cuts and the scrapping of 34 aircraft - nearly a third of its 112-strong fleet - are the only way to proceed.
It aims to cut costs by 1.6bn Swiss francs ($1.21bn; £725m) in its new business plan, in the hope of putting itself in a better position when seeking to strike alliances with other airlines.
"The enduring crisis in the airline industry points to sector-wide consolidation," the airline said in a statement.
"Only healthy, well-positioned companies will survive."
Like most international airlines, the Swiss carrier has been hit by the combination of the global economic slowdown and the slump in air travel relating to the Sars virus and war in Iraq.
It has also suffered particularly badly from increased competition from low-cost airlines.
In response, the airline is changing the way the services on its aircraft are supplied for intra-European routes.
Effectively, it will have both old-style full-service and new-style budget travellers on the same plane.
Business class passengers will pay upfront to have access to all the trimmings, while their economy class fellow travellers will pay for meals, drinks and other services as they use them.
Details of where the job cuts would fall were not yet available.
But Swiss newspapers reported on Tuesday morning that while the management payroll would be cut by about half, most of the job losses would be among the airline's ground staff.
The company has already run into trouble with its job-cutting policies, after a Swiss court banned it from concentrating its firings of pilots among higher-paid former Swissair staff, rather than their lower-paid ex-Crossair colleagues.
There is also expected to be an unwelcome knock-on effect for Swiss's suppliers.
"Apart from the 3,000 redundancies at Swiss, we also fear the loss of 2,000 peripheral jobs," said Daniel Vischer, secretary general of VPOD union.
Ground handler Swissport has already announced 350 job cuts in Switzerland and a likely 100 abroad.
Most aviation analysts believe Swiss needs large scale job cuts to turn the airline's fortunes around. "They've got to reduce capacity," Ernst & Young analyst Lloyd Brown told BBC Radio.
Trading in Swiss's shares, which have lost more than 60% of their value this year, was suspended on Monday pending the restructuring announcement.
The actual press release from Swiss was long, but I've extracted the bit about the resizing...
Measures involving the network and the fleet
The first step in the direction of profitability is to make the necessary adjustments to the network. Focusing on high revenue routes and destinations with a promising future will provide the basis for all further action. The network must, therefore, be trimmed by up to 35%. In line with this, there will also be a substantial reduction in the number of destinations served directly from all SWISS locations in Switzerland. On the precise number and choice of destinations to be eliminated SWISS is informing first its partners. The key markets will be maintained in the network.
The seat-kilometres on offer in the intercontinental sector will be reduced by 31%. The number of aircraft will be trimmed from 25 to 18. SWISS will concentrate on high-volume routes and abandon non-profitable destinations. The long-haul fleet will be harmonised, the A330 and A340 family concept will generate multiple synergies.
On European routes, the seat-kilometres will be reduced by 38%. The number of medium-haul aircraft (A320 family) will be reduced from 24 to 21, and from 59 to 35 in the regional sector (Saab, Embraer, Avro). There are also plans to further standardise the regional fleet (ERJ 145 or Saab 2000). Loss-generating domestic connections will be abandoned. It is expected that the SWISS European network can be rendered profitable by concentrating on high-volume European destinations.
The sacrifices which SWISS now has to make are substantial. The reductions in our network and fleet will mean around 3000 redundancies. This is a painful measure, and SWISS is consulting with the unions to find the most partnerly solutions. Around 700 cockpit jobs, 830 cabin jobs, 850 overheads (incl. outstations), around 350 maintenance jobs, about 140 ground service jobs and 130 cargo jobs are affected. These reductions come in addition to the job losses announced in November 2002 (300) and February 2003 (700).
So, basically, they've made a total mess of the decent company that was Crossair. :(
Anyway, if anyone wants to read the press release in full, it's at http://www.swiss.com/index/sw-nw-pr-press-releases-03.htm?newsid=25140
There's actually a couple of press releases about it, so if you're really interested, go back to the 2003 PR section, and have a look what else is avaliable.