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Swissair shares rise 10% as 3,000 jobs cut
By William Hall in Zurich
Published: September 24 2001 09:10GMT | Last Updated: February 28 2002 15:16GMT
Swissair, Switzerland's struggling national airline , is to cut its long-haul fleet by a quarter and merge its short haul operations with Crossair, its low-cost sister company, in a bid to stave off bankruptcy.
It is also laying off immediately at least 3,000 of its 30,000 staff at Gate Gourmet, its airline catering unit as a result of the 'dramatic drop' in air travel following the terrorist attacks in New York and Washington.
Following the merger announcement Crossair's shares were suspended on the Swiss stock exchange on Monday until 12 GMT at the company's request. Crossair shares were up 5.3 per cent at SFr200 before the suspension. Shares reopened up at SFr203.
Investors reacted to Swissair's restructuring measures pushing the share price up SFr4.60 to SFr51.60 in morning trading.
Swissair's decision to substantially shrink the size of its flagship airline, which serves 210 destinations in 75 countries, and take the axe to Gate Gourmet, its biggest non-airline unit, follows the Swiss government's decision to help organise a private sector bailout of the Swissair group which employs 70,000 people around the world.
Mario Corti, the ex-Nestlé finance chief brought in to rescue Swissair last March, said that the company is working closely with the Swiss government and the business community to find a solution to its problems.
The Swiss government has appointed Ulrich Bremi, 71, a former chairman of the Swiss Re insurance giant, to formulate a public/private sector rescue plan in time for October 10.
Swissair, which has SFr15bn ($9.5bn) of debt and just SFr555m of equity, says that it urgently needs an equity injection if it is to realise the benefits of the proposed fundamental restructuring of its airline operations.
André Dose, Crossair's chief executive, has been appointed chief executive of Swiss Air Lines, a newly-formed division, with immediate effect, and will draw up a detailed restructuring plan within a month.
The decision to give the top airline job to Crossair's Mr Dose rather than Beat Schar, chief executive of the much bigger Swissair, underlines the scale of the cultural revolution underway in Swissair, one of Switzerland's more bureaucratic institutions.
Swissair has always operated at arms length from Crossair, its smaller quoted rival, and its pilots are much better paid than Crossair's pilots. Hence the decision to hand over operational control to the more entrepreneurial Crossair could lead to some resistance amongst the more conservative elements inside Swissair.
The new airline will build on Crossair's approach of providing a high quality product whilst implementing a 'significantly lower cost model' than Swissair.
It will focus primarily on European point-to-point premium traffic whilst retaining and enhancing service on profitable long haul routes.
Swissair will continue to operate long-haul routes to parts of Asia where it is already a strong carrier as well as the Middle East and Africa. It will also continue to serve key destinations in North America relevant to the Swiss business community.
Swissair intends to reduce its transfer traffic from 60 per cent to less than 40 per cent by 2004 at the latest.
Swissair's decision to take its axe to its long-haul fleet, and hand over operational control to Crossair, Europe's biggest regional airline, marks the end of its ambitions to create a rival group to European airline giants such as British Airways, Germany's Lufthansa and Air France.
Significantly Swissair's statement this morning made no mention of the group's Qualiflyer airline alliance which was supposed to be Swissair's answer to rival airline alliances such as British Airways' One World and Lufthansa's Star Alliance.
Swissair was already suffering severe financial problems prior to this month's US terrorist attacks as it disentangled itself from the previous discredited management's hugely ambitious expansion plans which cost the group SFr3.7bn last year and wiped out most of its equity.
By William Hall in Zurich
Published: September 24 2001 09:10GMT | Last Updated: February 28 2002 15:16GMT
Swissair, Switzerland's struggling national airline , is to cut its long-haul fleet by a quarter and merge its short haul operations with Crossair, its low-cost sister company, in a bid to stave off bankruptcy.
It is also laying off immediately at least 3,000 of its 30,000 staff at Gate Gourmet, its airline catering unit as a result of the 'dramatic drop' in air travel following the terrorist attacks in New York and Washington.
Following the merger announcement Crossair's shares were suspended on the Swiss stock exchange on Monday until 12 GMT at the company's request. Crossair shares were up 5.3 per cent at SFr200 before the suspension. Shares reopened up at SFr203.
Investors reacted to Swissair's restructuring measures pushing the share price up SFr4.60 to SFr51.60 in morning trading.
Swissair's decision to substantially shrink the size of its flagship airline, which serves 210 destinations in 75 countries, and take the axe to Gate Gourmet, its biggest non-airline unit, follows the Swiss government's decision to help organise a private sector bailout of the Swissair group which employs 70,000 people around the world.
Mario Corti, the ex-Nestlé finance chief brought in to rescue Swissair last March, said that the company is working closely with the Swiss government and the business community to find a solution to its problems.
The Swiss government has appointed Ulrich Bremi, 71, a former chairman of the Swiss Re insurance giant, to formulate a public/private sector rescue plan in time for October 10.
Swissair, which has SFr15bn ($9.5bn) of debt and just SFr555m of equity, says that it urgently needs an equity injection if it is to realise the benefits of the proposed fundamental restructuring of its airline operations.
André Dose, Crossair's chief executive, has been appointed chief executive of Swiss Air Lines, a newly-formed division, with immediate effect, and will draw up a detailed restructuring plan within a month.
The decision to give the top airline job to Crossair's Mr Dose rather than Beat Schar, chief executive of the much bigger Swissair, underlines the scale of the cultural revolution underway in Swissair, one of Switzerland's more bureaucratic institutions.
Swissair has always operated at arms length from Crossair, its smaller quoted rival, and its pilots are much better paid than Crossair's pilots. Hence the decision to hand over operational control to the more entrepreneurial Crossair could lead to some resistance amongst the more conservative elements inside Swissair.
The new airline will build on Crossair's approach of providing a high quality product whilst implementing a 'significantly lower cost model' than Swissair.
It will focus primarily on European point-to-point premium traffic whilst retaining and enhancing service on profitable long haul routes.
Swissair will continue to operate long-haul routes to parts of Asia where it is already a strong carrier as well as the Middle East and Africa. It will also continue to serve key destinations in North America relevant to the Swiss business community.
Swissair intends to reduce its transfer traffic from 60 per cent to less than 40 per cent by 2004 at the latest.
Swissair's decision to take its axe to its long-haul fleet, and hand over operational control to Crossair, Europe's biggest regional airline, marks the end of its ambitions to create a rival group to European airline giants such as British Airways, Germany's Lufthansa and Air France.
Significantly Swissair's statement this morning made no mention of the group's Qualiflyer airline alliance which was supposed to be Swissair's answer to rival airline alliances such as British Airways' One World and Lufthansa's Star Alliance.
Swissair was already suffering severe financial problems prior to this month's US terrorist attacks as it disentangled itself from the previous discredited management's hugely ambitious expansion plans which cost the group SFr3.7bn last year and wiped out most of its equity.
