Size (of country) doesn't matter
Aviation Trainer: by your argument, you could say Singapore Airlines, Cathay and KLM, all "flag-carriers" of small countries aren't needed.
It's not Size of country that matters, it's a lot of other factors: location, route network, transfer market, cost structure, quality of management and staff etc etc.
I won't comment on Quality of Management at Swiss.
But I will say that flying empty MD-11s to Cairo at present is a bit over the top when an A319 would do instead...
Grüssli