Swissair Will Sell Assets, Cut Staff And Trade Up-Market

by Ulrika Lomas, Tax-News.com, Brussels

03 September 2001

After reporting a first half loss last week of SFr234 million ($140 million) and seeing its shares drop by 15% in two days, Swissair's Chairman and Chief Executive, Mario Corti, gave an interview on Saturday in which he announced plans to raise airline ticket prices in a further bid to reduce net debt and turn the troubled company around.

Mr Corti told the “Tages-Anzeiger” newspaper about a new strategy to reinforce Swissair’s market position as a quality airline aimed at the top end of the market. “We must have the courage to separate ourselves from our competitors through our services and prices,” he said.

Echoing British Airways' strategy which at least at first has seemed to be successful, Mr Corti said that in Switzerland it was not possible to attract both ends of the market within one brand. He accepts that clients will be lost from the cheaper end of the market, but thinks that the results will be worthwhile.

Last Thursday, announcing the poor results, Mr Conti said the group would shed 1,250 jobs (out of 72,000) but on Saturday he did not rule out another corporate shakeup in November, saying: “I would like to see a reduced but top quality staff.”

Mr Corti also expanded on his intention to dispose of assets such as Nuance, its chain of airport retailers, ground-handler Swissport, and its 49.5% stake in Germany’s LTU Group, which had been largely responsible for the first half loss.

In total Swissair is expecting to realise SFr4.5 billion from asset sales. The group's equity has fallen to just SFr555 million after the latest losses.

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