SWISS post COVID19

Old May 6, 2021, 3:43 am
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SWISS post COVID19

Swiss published the latest today https://bit.ly/3uqpSYL
- Great that FCL remains on all long-haul planes
- long-haul minus 5 Airbus
- short-haul minus 10 (A320 and reducrion in wet-lease)
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Old May 6, 2021, 3:51 am
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In view of the continuing global coronavirus pandemic and the resulting structural changes in its markets, SWISS has concluded that a restructuring of the company now seems unavoidable. In the medium-term future, the company expects to see a structural decline of 20 per cent in overall demand. In response to this, the SWISS aircraft fleet should now be downsized from its 2019 extent by a projected 15 per cent. With due regard to the workforce resizing via voluntary measures and natural staff turnover that has been under way since 2020, this would also entail a total workforce reduction of around 1,700 full-time positions or over 20 per cent. It could also entail forced dismissals for up to 780 ground and flying personnel. SWISS has now initiated a consultation procedure to find solutions that are as socially responsible as possible, in collaboration with its employees and its social partners. Despite the restructuring measures now taking shape, all the stipulations of the Swiss Confederation in connection with its bank loan guarantees would continue to be met. SWISS will also continue to pursue its premium positioning, maintain its operations from both Zurich and Geneva and ensure that Switzerland remains connected with the world.

One year on from the outbreak of the global coronavirus pandemic, air transport activities remain very subdued. The impact of COVID-19 on aviation has been far more substantial than was the case with previous exogenous shocks, and has shaken the industry to an unprecedented extent. Swiss International Air Lines (SWISS) also finds itself confronted with the greatest challenge it has faced in its corporate history. The company responded swiftly to the pandemic’s outbreak and initiated comprehensive cost-saving measures to counter the crisis and the growing threat to its liquidity (for further details please see the media release on SWISS’s 2021 first-quarter results of 29 April 2021).

Restructuring now seems unavoidable

In view of the continuing absence of any industry recovery, a restructuring of SWISS that extends beyond the cost-saving measures already initiated now appears inevitable. “It has grown increasingly clear that our market is undergoing structural change, and that despite the actions which we were swift to take in response, a restructuring of our company now sadly seems unavoidable,” says SWISS CEO Dieter Vranckx.

In the medium-term future, SWISS expects to see a structural decline of 20 per cent in overall demand. “With our new ‘reaCH’ strategic programme, we are aligning ourselves to the changed market situation,” Vranckx continues. “reaCH includes a corporate resizing and transformation that should achieve sustainable overall cost savings of some CHF 500 million. Our aim is to repay our bank loans as promptly as possible and to sustainably retain our competitive credentials and regain our ability to invest.”

Aircraft fleet likely to be downsized 15 per cent

The present SWISS fleet of 90 of its own aircraft and the transports of Helvetic Airways which operate SWISS services on SWISS’s behalf under wet-lease agreements will be resized in line with the decline in demand, and is likely to be reduced by 15 per cent from its 2019 size. As a result, the short- and medium-haul fleet would be downsized from 69 to 59 aircraft through the withdrawal of Airbus A320-family equipment and a reduction in the wet-lease operations. On the long-haul front SWISS plans to reduce its fleet from 31 to 26 aircraft, by withdrawing five of its long-haul Airbuses.

As a result of the declines in demand, frequencies are likely to be reduced from their 2019 levels on both short- and medium-haul and long-haul routes. In addition, services may not yet be restored at all on a few direct intercontinental routes. All these plans and proposals would continue to pay full regard to the Swiss Confederation’s proviso when guaranteeing the requisite bank loans, i.e. that SWISS’s flight programme should continue to be developed in proportion to the overall flight programme of the airlines of the Lufthansa Group.

Up to 780 employees could be affected

The envisaged downsizing of the SWISS aircraft fleet and the adoption of further measures would also have an impact on the size of the future SWISS workforce1. By the end of 2021, the company will already have reduced this by over 1,000 full-time equivalents (FTEs) through a combination of voluntary personnel measures and natural staff turnover. But a further downsizing now looks impossible to avoid. As part of the resizing planned, up to 780 employees (650 FTEs) could be affected: around 200 ground personnel, 60 at SWISS Technics, 400 cabin personnel and 120 cockpit personnel. The resulting overall elimination of some 1,700 FTEs would be a reduction of more than 20 per cent from the workforce’s 2019 level.

In view of the structural change that is now being seen in the market, this action would need to be taken regardless of any further extension of the present short-time working arrangements. “I immensely regret that, after so many years of success with such a great team, we now have to consider such a painful step,” says CEO Vranckx. “Unfortunately, the situation remains challenging in the extreme, and continues to demand rigorous cost discipline and efficiency. We are convinced, though, that with the restructuring we envisage, we would emerge from this crisis all the stronger and all the more able to return SWISS to sustainable success in the ‘New Normal’.”

Consultation procedure initiated

The consultation procedure that has now been initiated in connection with the envisaged restructuring will see SWISS work with its social partners, its employees and their representatives to find further solutions which could keep the numbers of any forced dismissals required as low as possible and could ensure that any such dismissals were conducted with optimum regard to their social ramifications. This, too, would comply with the provisos under which the Swiss Confederation undertook to guarantee SWISS’s bank loans.

‘Sozialplan’ severance benefits plans are already in place for all SWISS personnel groups except its cockpit personnel. Since the present collective labour agreement for the company’s cockpit personnel includes protection from dismissal, a solution will now need to be found with the pilots’ AEROPERS association at the negotiating table to tackle the structural cockpit staffing surplus.

The consultation procedure and the subsequent evaluation phase are expected to be concluded by mid-June. SWISS will then communicate its corresponding decisions.

Premium positioning remains – even stronger emphasis on sustainability

As The Airline of Switzerland, even after any restructuring and with a smaller aircraft fleet, SWISS will still operate a large part of its previous network and thus continue to perform its mission of meeting the air transport needs of the Swiss economy, the people of Switzerland and the Swiss tourism sector in line with the new demands. To these ends, SWISS also remains fully committed to its two Swiss operating locations of Hub Zurich and Geneva, and will continue to provide direct intercontinental air services that keep Switzerland connected with the world. SWISS’s premium positioning will also remain unchanged: the company will, for instance, continue to offer a First Class on all its long-haul flights.

The resizing and transformation envisaged under the reaCH programme also extend to an even stronger alignment of the SWISS business model to both sustainability considerations and structural change in the working world. This will centre in particular on steadily further modernizing the SWISS aircraft fleet, using sustainable aviation fuel and further developing and refining intermodal transport solutions. By adopting new work models and agile corporate structures, SWISS will also pay due and full regard to the structural changes in the working world; and the company will further continue to exploit all the new possibilities which are opened up by ever-growing digitalization.

Collaborations will also be intensified within the Lufthansa Group, with further synergies tapped. SWISS also aims to continue to strengthen its position within the Group by developing further competence centres, not least in the commercial area. And the already well-established collaboration with sister carrier Edelweiss will also be further pursued.

1 pre-pandemic as of 2019: 9,500 employees or 7,550 full-time equivalents
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Old May 6, 2021, 4:27 am
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Outch.

Not exactly surprising. But .
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Old May 6, 2021, 6:07 am
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Just received an email from Core Customer Care to HON with an invite for a briefing:

Dear Mr. MichielR,

The Corona pandemic has dominated our daily lives to an ever greater extent over the past year, both in your and our professional and private lives.

The crisis has now assumed a magnitude that confronts us at SWISS with enormous economic challenges , in addition to the operational and health aspects. In such a dynamic and uncertain situation it is currently crucial to react with foresight from an economic perspective and to position ourselves accordingly for the future.

As you may have gathered from the media, due to the structural changes in our industry and the pandemic related further delays in demand recovery, SWISS is now regrettably compelled to consider a restructuring that goes beyond the comprehensive cost-saving actions that we have already introduced in order to shape our future as premium airline.

As it is of great importance to us to give you a firsthand overview, we would like to offer you the opportunity to participate in a webcast with our Chief Commercial Officer, Mr. Tamur Goudarzi Pour.

The webcast is planned to take place early June. The invitation will follow in due time.

Your Core Customer Care Team
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Old May 6, 2021, 6:07 am
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That solves the mystery about the A343. Or 5 A330 go to other LH group airlines.
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Old May 6, 2021, 6:41 am
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Im sure they already know which routes will be affected. Sure wish they would announce them, so that alternative plans can be arrnged if needed. Thats either a route being discontinued or flights cut which may mean having to fly on someone else.
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Old May 6, 2021, 7:29 am
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I doubt these are about immediate changes in the summer 21 or winter 21/22 schedule. This is a general downsizing with the associated staff reductions.
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Old May 6, 2021, 7:49 am
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Originally Posted by craz
Im sure they already know which routes will be affected. Sure wish they would announce them, so that alternative plans can be arrnged if needed. Thats either a route being discontinued or flights cut which may mean having to fly on someone else.
I got the same invite for the June Webcast. Lets see what they have to say on the service in the future and the routes. I guess you can check the current A340 routes and those with twice a day A330 routes which are both a bet to be cut/reduced.

Originally Posted by oliver2002
I doubt these are about immediate changes in the summer 21 or winter 21/22 schedule. This is a general downsizing with the associated staff reductions.
I am more worried about reducing premium service and quality compare to loosing a route. LH Groups attitude is recently to call it premium but it is actually a lot of cheap in there.

Last edited by oliver2002; May 6, 2021 at 8:00 am Reason: please use multiquote
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Old May 6, 2021, 8:13 am
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Originally Posted by craz
Im sure they already know which routes will be affected. Sure wish they would announce them, so that alternative plans can be arrnged if needed. Thats either a route being discontinued or flights cut which may mean having to fly on someone else.
My guess is that it will be mostly frequencies that are cut and in full coordination with LH. I don't see the last announced IAD and KIX routes starting but don't see any immediate candidates for discontinued routes - then I don't have any insights as to revenue and loads.
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Old May 6, 2021, 11:32 am
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Originally Posted by MichielR
My guess is that it will be mostly frequencies that are cut and in full coordination with LH. I don't see the last announced IAD and KIX routes starting but don't see any immediate candidates for discontinued routes - then I don't have any insights as to revenue and loads.
Even if only frequency is being cut, It may mean a single flight on a route where there was 2 or 3 previous and that may mean not being able to connect till the following day or arriving at the end destination at a time that isnt convenient, thusly having to look for another carrier instead.

Im sure they already know more or less where the cuts will be so why not publish them.

Could be some routes that they suspended wont be restarted, especially where the wide-bodies are concerned. As it is when a wide-body went MX it threw everything off so getting rid of the planes will only mean more trouble when a MX occurs
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Old May 6, 2021, 3:10 pm
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Very disappointing news. I had hoped that the long haul would remain somewhat untouched. It'll be interesting to see if some people will argue that the reduction (at a reduction of 16% of their long haul capacity) is higher than at Lufthansa or other Group airlines, which would then be in conflict with the government loan.

I am hoping for a higher increase in demand than anticipated post-covid that will hopefully have them return most if not all the pre-covid routes with the addition of maybe a few new ones Yeah, I know...

Originally Posted by oliver2002
That solves the mystery about the A343. Or 5 A330 go to other LH group airlines.
If they are moving them similarly to what happened to the Edelweiss A330s, the Swiss government and the unions will not be happy about the reduction in favor of wingsdings.

Last edited by Nick Art; May 6, 2021 at 3:15 pm
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Old May 7, 2021, 1:00 am
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All these plans and proposals would continue to pay full regard to the Swiss Confederation’s proviso when guaranteeing the requisite bank loans, i.e. that SWISS’s flight programme should continue to be developed in proportion to the overall flight programme of the airlines of the Lufthansa Group.
I'm pretty sure the 5 widebodies are going away in line with whatever the CH authorities approve(d).
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Old May 7, 2021, 3:04 am
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Originally Posted by oliver2002
I'm pretty sure the 5 widebodies are going away in line with whatever the CH authorities approve(d).
That doesn't mean the unions or other political party members won't complain anyway
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Old May 7, 2021, 7:22 am
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Old May 7, 2021, 10:15 am
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Originally Posted by oliver2002
I doubt these are about immediate changes in the summer 21 or winter 21/22 schedule. This is a general downsizing with the associated staff reductions.
Guess again," Just got a notice that my June 2 ZRH-LAX flight has been cut. I did a cursory look at a couple of other dates. Gone."https://www.flyertalk.com/forum/33233138-post1.html
Also as to others who said it will be frequencys that will be affected, wrong as well. Just cause a destination ha dmore then 1 widebody a day doesnt mean it will be cut if the $$$ are there and as well just cause a route makes $$ doesnt mean it wont be cut if LX needs the aircraft for another rroute where it makes alot more $$$

But as I said up thread I found it hard to believe that LX doesnt know what routes will be shut and where they will reduce frequency, so why not let the public know?
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