'Swiss' Says It's Encouraged By Q1 Losses

by Ulrika Lomas, Tax-News.com, Brussels

15 May 2002

In a seemingly paradoxical statement, Switzerland's new national airline 'swiss', has announced that it welcomes a first quarter loss of around SFr190 million ($119.2 million), arguing that the results were 'better than expected'.

The company's CEO, Andre Dose said on Monday that, despite the fact that swiss's second quarter losses are likely to be even larger, due to the planned intercontinental expansion of services, he is still confident that the company - which was established in March using fresh capital from Swiss companies such as Nestle, and financial services giants such UBS and the Credit Suisse Group - can keep to its business plan.

However, he admitted that: 'It is still too early to make a more precise prediction of our bottom-line result for the year as a whole.'

According to a report in the Swissinfo news service on Tuesday, swiss is currently in talks with the 'oneworld' alliance, composed of eight airlines from around the world, with regard to becoming a member. This is thought to be a crucial step for the fledgling carrier, and although it has received the support of founding member American Airlines, other oneworld members, such as British Airways, are understood to be reluctant to allow swiss to enter the inner sanctum.

According to analysts, despite the optimism demonstrated by the new airline's management team, there are still concerns within the tourism sector in Switzerland that at a time of overcapacity, when budget carriers such as easyJet are performing so well, a business plan which calls for quality at a low cost base may not be terribly viable.

There are also said to be fears over the fact that not all of the airline's cabin crews accepted a lower pay deal in order to reduce operating costs when the former regional airline, Crossair, and the collapsed Swissair group merged.

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