Swissair Group chairman Mario Corti has set out his turnaround programme for the troubled company, but refuses to be drawn on any alliance plans.
Corti gave a presentation in mid-July on his strategy for rescuing the group from its financial plight. The event was much heralded, and attracted eight coach-loads of protesters from among Sabena's staff.
In the event, there were no fundamental changes in group strategy or structure and only a limited number of disposals. Corti used the occasion to quash speculation that the group was running into liquidity problems. Tackling Swissair's huge SFr7.8 billion ($4.2 billion) debt burden is a top priority, and Corti set a target of a SFr3 billion reduction by 2003. Debt will be reduced through disposals, increased operational cash flow and a reduction in capital expenditure.
Leasing arm Flightlease is exiting the third-party leasing business, which puts an end to its joint venture with GATX. Corti is in talks with Lufthansa Systems on a possible merger with Swissair's Atraxis IT arm. There is an exchange of assets with UK contract caterer Compass Group, which leaves Swissair's Gate Gourmet holding the Eurest flight catering unit and more focussed on airline operations.
On the airline side, Corti made it clear that he sees closer co-operation between Swissair and regional carrier Crossair as the way forward, and that American Airlines is viewed as the key alliance partner.
One financial analyst agrees that Swissair is right to establish a strong transatlantic link. "A North American partner is key," he says. The stress on American obviously adds weight to the view that Swissair will end up in oneworld. He points out, however, that this would need agreement from the alliance's European members. Insiders say that BA chief executive Rod Eddington believes Swissair has little to contribute given its current weakness, and is keener to build on relationships with current oneworld partners.
Corti sees a closer and more productive relationship between Swissair and Crossair as critical. "We have a strategy in place. Two companies, two brands, one system," he says. This strategy is likely to see Crossair taking over certain short-haul European destinations. Markus Johl, president of the Swissair pilots union Aeropers, says: "Crossair has the ability to serve markets where Swissair can't make a profit."
The pilots have so far been supportive of Corti's strategy and have agreed to take a 5% pay cut. This deal is up for renegotiation in two years time, and Johl says that the Swissair pilots want to be "roughly in the middle" of the European flag carrier average in terms of pay.
Source: Airline Business
