Updated Crossair/Swissair Business Plan Revealed

[The Guvnor]

From ATWOnline

Crossair, Swissair to form new international airline
Dateline: Monday December 10, 2001

Crossair CEO Andre Dose said the project to revive bankrupt Swissair aims "to create and develop a new international airline" rather than merging the two carriers.

Dose presented a business concept and outlined the planned development of the rapidly forming new airline to shareholders at a special meeting in Basel last week. Restructuring to salvage remnants of Swissair along relatively modest lines "represents expansion in a different direction, accompanied by a fresh[operational] focus" that can lead the combined entity to profitability, he said.

A new board of directors picked by a steering committee designated by controlling banks was installed at the marathon 6-hr. meeting. A SFr2.7 billion ($1.6 billion)
capital increase also was approved.

One of the first items on the reconstituted supervisory board's agenda will be selecting
a name for the new airline, Dose said. Preliminary indications point to branding the
carrier Swiss Airways, with Swiss Air Lines a possible alternative, sources told ATWOnline. The Swissair name belongs to the SAirGroup holding company but its owners are asking far too much for it to be considered, informed sources said.

The SR code on short- and medium-distance flights will be replaced by Crossair's LX designator by mid-Jan. LX is also the likely code for former Swissair long-haul operations that revert to Crossair at the end of March. The carrier's network concept will be formed around Zurich as an intercontinental hub and EuroAirport Basel-Mulhouse-Freiburg as a regional hub, with connections from Geneva, Lugano and Bern, Dose said. There will be less emphasis on transfer traffic and more concentration on local point-to-point operations.

Plans call for 26 A320-family aircraft for the short-haul European fleet, versus Swissair's former 41 planes, and 26 aircraft for the medium- and long-haul fleet, down from Swissair's 35. Folding in the current Crossair fleet would raise the total to 125 aircraft in 2002 to transport a projected 9.8 million passengers. The fleet would increase in 2003 to 126 with 14.1 million projected passengers and in 2004 to 127 with 14.5 million passengers.

Crossair planners envisage "only around SFr3 billion in revenue in 2002, leading to a SFr1.1 billion loss for the year," Dose said. Revenue is projected to recover in 2003 to about SFr5 billion, heading the company toward breakeven, with profits and "moderate growth" expected from 2004 onward. The balance sheet equity ratio is expected to remain at around 35% after the turnaround is completed, he added.

The pared-down intercontinental network from April will encompass seven destinations and 62 frequencies in North America, three destinations and 16 frequencies in South America, 14 destinations and 37 frequencies in Africa, seven destinations and 37 frequencies in the Middle East and nine destinations and 54 frequencies in Southeast
Asia.

Membership in one of the major alliances is basic to future planning, Dose told ATWOnline. "It's the only way to go for an airline operating globally. Simply an imperative," he said, adding that extensive discussions are well underway. Aside from competitive considerations regarding the Star Alliance and Lufthansa, some analysts question whether any alliance would view the Swissair/Crossair amalgamation as a potential partner while it is still in early stages of organizing.

Getting former Swissair employees to work in harmony with Crossair staff within the new airline is a challenging stumbling block that needs to be overcome quickly, Dose admitted. There are deeply imbedded differences in corporate culture between the two groups. Observers of the local aviation scene view Swissair as much more conservative than independent-minded Crossair.

[LROPS]

Yeah! Sink 3 airlines, declare bankruptcy to avoid all responsibilities and start a "new" airline :mad:
Swissair A Bien Empoché Notre Argent.
Anyway good news for all ex-SR employees.

[411A]

One thing is for certain, from the beginning, costs need to be controlled....and flight and cabin crew salaries kept in check.
The gravy train is....over.
Wonder when they will train the Crossair guys on the MD-11? :rolleyes:

[Saab 2000 Driver]

Mmm, one look at LROPS profile says it all.

http://community.theunderdogs.org/smiley/angry/cussing.gif

[A7E Driver]

Andre is a great guy, and like Moritz, grew up in a cockpit rather than a banker's conference room. If anyone can make it work, it is him. I hope the crews of LX and SR will support him in trying to move forward rather than bickering between themselves. Good luck.

[Saab 2000 Driver]

One thing is for certain, from the beginning, costs need to be controlled....and flight and cabin crew salaries kept in check.
Thanks 411A for those words of infinite wisdom ! :rolleyes:

[LROPS]

What's the problem with my post/profile S2000?

[ 10 December 2001: Message edited by: LROPS ]

[Saab 2000 Driver]

Well, "Student engineer", "Licence type: private" and some obvious sour grapes about the SR-SN history.

This thread is about the business plan of CROSSAIR !

Notre Argent WHAT money, SN never had any money, nor has SN ever MADE any money ! The only money SN ever had (and subsequently wasted) was given by the Belgian taxpayer ! Don´t blame SR or LX for SN´s troubles.

[bluskis]

saab2000
quite right , don't blame SR or LX for SN problems, but who was the yoyo at SR who didn't notice SN track record?

[bluskis]

forgot to add, good wishes for a sucessful new airline

[Hunter58]

Bluskis

actually these guys were heavily influenced by Mr. Rainer E. Gut, at theat time the head of what is now Credit Suisse. Later on he sent his protegé Lukas Mühlemann into the Swissair Board. And guess what: after being responsible for the fiasco (with the pleasant help of Mrss. Brugisser, Schorderet, Goetz and Co), he now is the Head of the Steering Commité and appoints another total failure from KLM to do the job? And this on MY tax money! :mad:

LROPS
just not to forget: the SABENA adventure cost Swissair over 2 BILLION US Dollars. That is money they sunk into Sabena, so where the f**k is it? If someone stole money here, they're sitting in belgium, and after a stupid Belgian company with subleased turkish drunken drivers did cause the Gotthard tunnel catastrophy, I'd be very quiet if I were you. I don't need your stupid trucks! Stay home! :mad:

[Ace Rimmer]

Andre is indeed a good guy who has 'come up the hard way' crop dusting, corporate flying and then to airlines.

But make no mistake he has a hard row to hoe. The cultures of the LX and SR are vastly different and could prove the undoing of the new airline. Add to the mix the gnomes being in charge with 70% holding Dose's job will doubtless be even harder than it needs to be.

[Few Cloudy]

LROPS,

"Good news for ex-SR employees"....

It is medium good news for some of the present employees of SR, who will be able to continue to fly under the arrangement - if it works. It is terrible news for the ex-SR employees and some future ex- SR employees, who are just that - out of work. 26 long range and 26 short range aircraft are only a part of the original fleet.

By the way I also sympathise with the Sabena job losses. Swissair made a terrible mistake trying to have Sabena as a partner and then having to pour their fortune into the company to keep it operating but the plight of the Sabena jobless is no less hard for that.

[Hooking Fell]

Hunter 58 and LROPS:

Aren't we getting just a bit too parochial here?

As for SAir Group's adventure into Belgium... well they also forced their money upon a number of other hopeless commercial ventures, notably so in France and Italy.

Hunter 58: you might also want to consider that all three major "Swiss" airports (LSZM, LSGG, LSZH) only operate thanks to neighbours (in Germany and France)who are asked to burden an environmental impact that most "Bünzlis" are unwilling to accept.

All in all, it seems that Sabena was a worthy member of SAir Group (or vice-versa, if you like). Certainly, there would have been lots of cross-insemination of financial acrobatic prowess

:D :D

[ 11 December 2001: Message edited by: Hooking Fell ]

[renegator]

Gruezi to the Swiss colleagues,

although it might not be a very popular question in times like these but I wonder why they are still talking of 26 long-haul aircraft. Of course it is only a part of SR´s former fleet but it seems to be rather unrealistic in size.

The "option" of forming an new alliance mentioned by P. Bouw hopefully is just a misunderstanding at his part... but joining one of the existing ones would either require a complete drop of long-haul for star or a significantly reduced volume for Skyteam. I think the answer of Oneworld is already known, so what are those bankers and politicians in Switzerland talking of? Sure it would be a good thing to have a big fleet, but it is not needed and might be the beginning of the next end.

It might sound hard from the outside but this is probable not the right strategy for the future but wishful thinking from the old elite of SR.

Open for comments, it´s just my outside view.
Brgds & good luck, silversurfer

[LROPS]

Saab-2000

I don't blame SR for all the trouble but they have theire responsibilities!!
One exemple: When SN-Catering became GateGourmet the cost rose by 500% with the same structure :eek:

Hunter,

If someone stole money here, they're sitting in belgium, and after a stupid Belgian company with subleased turkish drunken drivers did cause the Gotthard tunnel catastrophy, I'd be very quiet if I were you. I don't need your stupid trucks! Stay home!
Very intelligent and constructive. I could say Swiss poeple stole a lot of money during the WW but I am not so stupid as you. I don't sentence a whole country for individual mistakes :mad:

Few Cloudy

But they have a future that ex-Sn employees don't

[The Guvnor]

Lrops - perhaps if the SN employees weren't keener on striking rather than working, then they would still be around today!

In addition, you can blame the horrendously high 'social costs' in Belgium that make running a business nearly twice as expensive there than anywhere else in the EU - you need to decide whether you want to be a welfare state where everyone vegitates at home on government handouts or you want to be entrepreneurial like the Brits, Irish or the Dutch. Guess where the foreign investment goes! :rolleyes: :eek: :rolleyes:

[LROPS]

Lrops - perhaps if the SN employees weren't keener on striking rather than working, then they would still be around today!
In addition, you can blame the horrendously high 'social costs' in Belgium that make running a business nearly twice as expensive there than anywhere else in the EU - you need to decide whether you want to be a welfare state where everyone vegitates at home on government handouts or you want to be entrepreneurial like the Brits, Irish or the Dutch. Guess where the foreign investment goes!
I agree with you on this
As I said before I don't blame SR for the entire SN case but I think ALL the responsibles, including belgium gov, have to pay for theirs errors in managment. And there are a lot!!

[Gantenbein]

Hunter58: anyone who calls himself God is, in my view, more than a little suspicious. You may want to accept this opportunity to win a soul. Would you care to elaborate on the following points:
Why do you consider Pieter Bouw to be a total failure? (No-one else seems to)
What is the portion of the taxes you pay that has gone into the Swissair fiasco?
What does a road accident have to do with this topic?

Saab2000: whatever else you say, you have to admit that promising to invest in a company (in return for something else), and then simply declaring you're unable to do so and start from square one as if nothing had happened may be good for business, but it's hardly very ethical.

Guvnor: have you ever considered the possibility that the reason why Belgians (and the oft-maligned French) resort to striking is because it is the only way for their grievances to be heard? To quote a very recent example: French gendarmes went on strike to obtain improved work conditions. Many of them had taken their personal computers to work in order to be able to continue working. How can anyone not sympathise with them? The problem seems to lie at least as much with management as with those who expose themselves to the media.

Finally: a fourth European alliance may not a bad idea at all. Let's prove Jürgen Weber, Rod Eddington and Jean-Cyril Spinetta wrong!

[Hold at Saffa]

My goodness, Bentagain, how VERY progressive!
Rather than grievances, one suspects that our French and Belgian colleagues strike in order to be heard....
The fact that they lack moral, ethical or legal substance in their claims is, as ever, secondary to the need for attention which lies at the centre of their identity.

Swissair made a well intended, albeit misguided investment of good faith in Sabena. Who could have guessed the extent to which the Belgians collectively swallow.

For those of us who enjoy at least a nodding aquaintance with sanity (hello Hunter58, I see the increase in your Lithium dossage hasn't kicked in yet!), understanding the reason for Switzerland's excentricity from the EU, the opportunities being grasped by the expanded Crossair become self-evident.

It will, of course, thrive.

[ElNino]

"Folding in the current Crossair fleet would raise the total to 125 aircraft in 2002 to transport a projected 9.8 million passengers. "

Hmmm, 9.8 million pax in 125 aircraft??? Ryanair carry similar numbers in approx. 36 aircraft... Granted you'll need more aircraft for longer haul services, but this still seems like a crazy number of aircraft for the projected numbers. Looks like a recipe for huge costs and insufficient yields... Good luck to them, I hope it works, but I have my doubts.

411A: If indeed you are a pilot as your profile claims, is it always your policy to back stab your peers and collegues? Methinks you're probably quite short on drinking buddies.

Guvnor: Well said about the welfare state. Time and time again reliance on a welfare socialist system as opposed to entreprenuerialism has proved to destroy economies and wealth creation, making sure everyone suffers. A system for the jealous and the lazy.

[The Guvnor]

Gantenbein, you said:

have you ever considered the possibility that the reason why Belgians (and the oft-maligned French) resort to striking is because it is the only way for their grievances to be heard?

Interestingly, it seems that the vast majority of strikes in Belgium (and France) seem to be directed at the government - not private companies. The recent French ATC strike is one such; as was the near-riots in the centre of Brussels when Sabena employees tried to burn down the Prime Minister's residence.

Well, I don't know about your neck of the woods, but here we have this thing called democracy. If we want our voices to be heard, we vote out the incumbents and replace them with people that listen.

Not that it seems to be working well with the present lot! :mad: :eek: :mad:

[Gantenbein]

Guvnor:
But your words don’t contradict me at all! Since many Belgian and French companies are still partly government-owned, the 'management' that the staff rebel against includes government! The gendarmes I mentioned are a case in point. They are a military outfit, they don't have the right to strike, and for them to go out on to the streets proves how hard-pressed they were to see some improvement in their conditions.
In my neck of the woods, democracy exists, believe it or not. But ask any Belgian or French employee whether they are willing to wait and see if the next elections will bring change. Their jobs, regardless of what has happened in the past, will come first.

Anyone care to comment on the chances of a fourth European alliance?

[renegator]

Gantenbein,

just like to comment on the alliances. As these mostly are marketing alliances covering alignment of flight schedules, FFP´s, reservation systems, codes... in order to attract higher passenger numbers to their alliance system without really integrating the participating carriers (look at the current level of integration in Star or Skyteam - it´s not able to really bring cost down), you need some strong partners, especially between Europe the US and Asia. With whom in the US would you want to form a new alliance? And with whom in Europe, you would end up with a new approach to Qualiflyer with its unique secondary carrier & hub idea which proved to be a costly mistake because the basic assumption was not right (although fascinating)The local pax potential in ZRH is not suitable for a huge hub operation (especially not in comparison to e.g. LHR or CDG) und feeding in passengers simply increases cost with pax normally accepting hub connections via other countries only if there is a lower price level involves (eco) und for C it is more a matter of connectivity, ffp and service level (ok, here SR could have gained some ground)

I simply doubt that a new combination of secondary carriers, as this is what LX will be, will have any potential to stay in europe´s thin air, as the consolidation process just has started. Any combination with other alliances would cut the long-haul wings, but this approach might in the end result in some job security. Airline economics have always be valid in CH as well but been ignored for some time. Continue with that or end wishful thinking, face reality und do something with a real future.

silversurfer

[gofer]

Strange how a topic can drift off subject.

Far be it from me to comment on the efficiency of a strike. A pure oxymoron if ever I saw one.

On a +ve note however, with so many potential experts around on the forum, pointing out the pitfalls, and even better, bringing up some “out of the box” thinking as potential solutions, to help André and keep a few flying jobs in Switzerland would perhaps be more constructive.

Fleet sizes

Indeed the math tends to suggest that somewhere around the original 26+13 idea would be a better deal than the 26/26, especially as we all know that shirts are being heavily lost over the puddle. Guv, if it were your show how would U structure it?

Given what they have in the way of choices and given that SR’s concept of a single cockpit, closely matched by LX’s similar idea for Embraer’s is basicall very sound. One has to think that a 2 cockpit logic (short-med haul and high vol-long haul) could make a lot of economic sense. I think my vision would be:

- Flog the MD’s for whatever the market rate is – the PAX hate them and a refurbish isn’t really on the cards.
- Keep A330’s for a few Africa & ME routes and perhaps an NYC and the US future partner’s hub.
- Swap everything else for A340’s for the profitable FE and LATAM routes.

In addition:

- Clean up the short haul fleet by have the DC’s go ASAP
- Eliminating the S2K’s for 145’s might be logical
- Keeping either AJ’s or A319’s, but not both, could get some further economies of scale, but whatever is selected the mid term 170/190’s must be remembered – they will be a lot more price performant than either of the others.
- Dumping ZRH as a Hub and moving it to BSL – only if a deal could be struck with the French ATC that guarantees NO STRIKES ??? Now there’s a novel idea.

Anyway part of the vision has to be - go for quality – if the service is 'the best', those with money will pay for it. Trying to beat the discounters will only make you ‘go for broke’.

The tricky thing really is - which partnership. The NW-KLM set-up is as close to a true partnership as any have got (and none go far enough from the PAX’s point of view), & the NW-KLM one is too down market. 1world seems out so – AF and back to Delta or the almost bankrupt Star (with United, Lufthansa, Varig, SAS, Ansett, ANZ, Thai, ANA and even Singapore all finding things very hard going). At present neither is a good choice – keeping Qualifryer and cross partnering (like Cathay does) sounds almost more logical as a short term strategy.

Personally – and it is very personal – even though I hope like heck that they make it; too much confidence is lost by the new boards make-up. With Moritz and André at the helm and avoiding the SR type ‘problem image’ in any shape or form they had a 60/40 chance – especially with a bit tighter rationalization than a first considered. But the board and the fixation on an expensive re-branding with a parallel to a bankrupt imaged name brings that down for me by about 15% points each. Even if that is only down by 25% in total – the current constellation is around a 35/65 chance in my view. Not good odds.

OK – its only sculpture on clouds – so shoot the straw-man down – but only if you can suggest improvements & stay positive guys & gals its jobs we are talking about.

------------------------------
Still hope it succeeds.

[ 12 December 2001: Message edited by: gofer ]

[spagiola]

Hmmm, you seem to be a little out of date on a number of things...

I think my vision would be:
- Flog the MD’s for whatever the market rate is – the PAX hate them and a refurbish isn’t really on the cards.
- Keep A330’s for a few Africa & ME routes and perhaps an NYC and the US future partner’s hub.
- Swap everything else for A340’s for the profitable FE and LATAM routes.

They need the MD-11s for longer routes, eg Japan, which ARE profitable, but not feasible by A330. And getting an all new type (A340s) right now when they have no money is not really feasible, although I can see this happening down the line (but not with -600s, as had been planned; more likely -300s).

In addition:
- Clean up the short haul fleet by have the DC’s go ASAP

Is over a year ago soon enough for you? All the MD-80s have been long gone.

- Eliminating the S2K’s for 145’s might be logical

Already planned. SAAB 340s and 2000s are being replaced with ERJ 145s and Embraer 170s.

- Keeping either AJ’s or A319’s, but not both, could get some further economies of scale, but whatever is selected the mid term 170/190’s must be remembered – they will be a lot more price performant than either of the others.

Avro RJs will be replaced by the Embraer 195s on order. AFAIK, the current plan does not call for any A319s to be kept, just A320s.

- Dumping ZRH as a Hub and moving it to BSL – only if a deal could be struck with the French ATC that guarantees NO STRIKES ??? Now there’s a novel idea.


ZRH is Switzerland's financial center. That's where most Swiss traffic originates, that's where most business travellers going to Switzerland go. ANd you want to drop that?

[The Guvnor]

On the subject of 'social actions' - I hear that former Sabena employees are intending to blockade Brussels Airport on the 14th (Friday) - the day of the Laeken European Council.

How to make friends and influence people the Mafia (oops, sory, Sabena) way! :mad: :rolleyes: :mad:

[LROPS]

Guv,

Those poeple aren't allowed to find another job and don't get any social help because they didn't recieved an official letter of dismissal!! That means more than 2 months without 1€!! Can you understand this action now??

[gofer]

Spag - beg to differ on some of that but thanks for the update:

Try:

Crossair's web page (http://www.crossair.com/de/unsere_firma/flotte/boing/index.html)

it actually admits that the MD80's are in the fleet, and I flew 2 of them last week (ugh yukki tight pitched 'Y' seats to kill kneecaps. Fact is they are still flying, also confirmed by other sources (my daughters duty roster this month).

The other thoughts were that when converting to very flexi leases - its cheaper to run a brand new fleet than some of the better "well run in" models - in spite of what the 'Guv' might think. And if I remember correctly Airbus or one of the leasing co's has a handfull of A340's that have range to equal the SR MD11's with 20-25% more capacity and a lower fuel consumption and could be available - next week - if there was operating money to run them !

The A330's are OK for the medium haul of Africa, Middle East and USA but the US is a real loss leader at the moment.

Any other comments, now's your chance to give a new management all that good advice they could perhaps use...

As for ZRH, well at the moment it isn't all golden there at all - but the EUROCROSS traffic at Basel proves that those who have to take a dog-leg like to do it through a small & efficient airport (ups sorry ZRH) coz its quicker. With a high percentage of long haul having already pulled out of ZRH in the last 12 months (United & Cathay to name but 2) the dog leg to LHR, CDG, FRA & AMS becomes the NORM - and don't forget that BSL has a better approach and longer runway. The only in-built handicap in EAP is the French ATC, versus the ZRH handicap of an approach over Germany or Rwy 28 which is useless for a solid sized tin can. And to cap it all the FLUGZUG is more efficient than Zurich-AP - if only they would build that 500 meter spur-line to EAP.

[ 13 December 2001: Message edited by: gofer ]

[Hunter58]

Gantenbein

well, it's just a 'freight god', so that's only a very tiny one.... :)

Why I consider Pieter Bowe to be a failure? Simple: look at his real resume (not the one given in the press, the one in the industry), talk to people who have worked with him and dealt with him, and then ask yoursself, why is the guy, who (in the eyes of the biggest culprit of the whole affair, Mr. Rainer E. Gut) should bring back the Swiss Air Traffic and is soooooo exeptionally good to be able to do that AVAILABLE! If he's so good, why isn't he still running KLM?

So all in all, I don't get the picture of a man who is able to take the major task on him to build a new airline on the remains of a formarly truly great one, and one that is still in massive growing pains.