Swiss to join oneworld?

[mactow]

CNN is reporting this morning that SWISS is to join the Oneworld alliance after having been invited to join by BA...is this finally going to happen?

[ettore]

A yellow paper in Zurich, the "Blick", said this morning (Monday) that a Memorundum of Understanding has been signed by all Oneworld member airlines. But it doesn't say what's written there.

Swiss COO William Meaney talked on several occasions with BA in the last months and Swiss CEO André Dosé met Eddington last Thursday. It doesn't mean that they agreed on anything. The MOM might be only saying they simply agreed on meeting again for another cup of tea.

Bill Meaney has a personal interest in Swiss joining Oneworld instead of being picked up by Lufthansa, since he had a row with former LH-CEO Juergen Weber and had to leave after three months only at Star Alliance.

According to press reports, AA is also pushing for Swiss joining Oneworld, because they do not want to see the Swiss Airline slip into the hands of Lufthansa. On its side, BA would reportedly be happy to have a hub in Switzerland. BA can forget Amsterdam, since Northwest told KLM loud and clear to join SkyTeam (Northwest became recently a partner of Delta, the SkyTeam leader in the US).

A Swiss Board member and former chief editor of the Blick, Walter Bosch, talked under cover of anonimity to all four Sunday Newspapers in Switzerland to publize the BA "solution". He could not provide thoses papers with any evidence of what is was saying. But being a member of the board, the press could not ignore what he was saying.

Bosch's main aim was to avoid the Sunday Press reporting on another more likely scenario, i.e. the insolvency of Swiss and the airline going under administration (Chapter 11). The Financial Times Deutschland had reported on the previous day of the likelyhood of Swiss going under administration.

Swiss is running out of cash, 3'500 people are being fired, motivation felt to its worst deepth, security problems are now araising due to stress and organizational problems and banks are very reluctant to provide the dearly needed line of credit the airline needs. An anonyme source at the financial division of Swiss reportedly said that Swiss will run out of cash in November if it doesn't manage to sell more A/C in the meantime.

I doubt Oneworld might really be interested in a Swiss membership if it goes into bankruptcy in the next few months. On another hand, joining the alliance might help Swiss in finding a credit facility. But the alliance membership would not help much to solve the basics problems: even after its downsizing, the fleet remains too big, the structure too costly, the market too small.

A takeover by Lufthansa would dramatically boost the network and help to cut the overhead costs, but the more than 300 Swiss managers sitting in Basel and Zurich do not want to hear of overhead cuts... They'd rather dye together with the airline instead of being fired by the Germans.

[ettore]

Quote:

Slightly off topic, why not invest in high speed magnet trains to FRA and MUC?

Unquote

That's precisely what the French did with their TGV. Since Brussels Zuid opened for high-speed trains from Paris, AF do not fly Brussels anymore, but code-shares with the French Railways company SNCF. But France decided itself for an extensive High-Speed train network more than 20 years ago!

In Switzerland the process of decision taking for such investements is even longer. Add to it that the topography of the country is not as easy as it is betwenn Paris and Brussel or betwenn Paris and Lyon, Marseille, Nantes, Bordeaux...

Today, FRA remains 4 hours by train from ZRH (forget about MUN with the train). Improvements would be lenghtly, costly and might not bring the competitive advantages required to divert flying pax to the train.

Basically, it would be – or should have been – a political decision. But Swiss politicians hate making decisions. That's one main reason for the presumed vitality of the so-called "direct democracy" in Switzerland. The more "the people" is said to "decide", the less responsabilty the politicians have to bear. Even if only 30% of the population go to the pooling station, they just ignore it.

This fear of decision making is also explaining why Swiss International Airline is now going down the drain. But it's another story...

[Aviation Trainer too]

The funny thing is that they have blown away enough money in Switserland to fund a lot of infrastructure improvements like rail connections in only a few months.....

[hanger35]

German Railways are actually constucting a high speed link fron Karlsrule to Basel which should tale at least a further 1/2 hour off the Frankfurt to Zurich link.

Slight digress - The track also actually passes an old Canadian Air Force Base called Lahr with the longest and stongest runway in Southern Germany which is now taking freight away from Basel but it not allowed to operate Passenger Flights probably because Basel and Strasbourg would loose out but both those airports are in France anyway so I don't know whats going on there. But can anyone remember that Ryanair is having problems at Strasbourg. Lahr could be the alternative. If the swiss build a high speed link from Basel to Zurich it's looking pretty grim for Basel!:{

[ettore]

A very interesting study found on the internet, evaluating aircraft and High Speed Train (HST) operating costs by Moshe Givoni leads to the conclusion that HST might be a real incentive for an airline to shift its PAX from an A/C to the train only at peak hours and with respect to environmental costs.
The study focusses on the CDG-Heathrow route and takes only operating costs (not the financial and infrastructure sides) into consideration, and this with a lot of assumptions. But it's a very interesting paper, suggesting that more could be done to study rail alternative on short haul.
Sorry, I lost the link, so please go Google with the author's name.

[Snoopy]

Actually, I feel it's a little unfair to castigate the Swiss regarding a lack of rail infrastructure. The SBB are really quite efficient and there is probably less demand for a HST link between Zurich, Bern and Geneva, than let's say for Frankfurt-Basel.

Regarding the rail link between ZRH and MUC, well the line up to the Austrian border is pretty good, at least Intercity standard. Once you get into Germany it is almost a one-track country branch line for most of the way.....

[PAXboy]

Once you get into Germany it is almost a one-track country branch line for most of the way..... As I recall, driving from MUC, where I was working, down to the border a couple of times, the geography around there compels it to be a very winding route. The track and the road wiggle through the valleys together.

I have to say, based on nothing more than an outsider's point of view, the chance of Swiss surviving another five years must be very low indeed. From what has been said here, it looks like it will go to the wire (again) and then a fire sale. If they sold themselves now, some money would be saved - possibly even jobs too, but companies do not do that very often.

[HZ123]

Another 'Joker' joins the pack. As many of you state cannot see what would be gained by Swiss or the other members. At present ssurely the 'groupings are of no great help to any airline.

[MarkD]

http://www.examiner.ie/pport/web/ireland/Full_Story/did-sg0oxkB1js81w.asp
18/08/03
BA offers to take major stake in Swiss airline

BRITISH AIRWAYS is offering to take a major stake in Swiss International Air Lines, while Germany’s Lufthansa is eyeing a full takeover, a Swiss newspaper reports.
Quoting an internal source, the SonntagsZeitung said BA's participation in the loss-making Swiss carrier would be accompanied by an offer for Swiss to join the oneworld alliance, Swiss's goal since the airline was created in April 2002.

The paper said that at the same time, Swiss management had been to Frankfurt in recent days to discuss a firmed-up offer from Lufthansa to take over the airline


in full. Swiss has in the past said it was talking to Lufthansa, but declined to say what about. Swiss director Walter Bosch said on Saturday it was unlikely the board would decide on strategic options already at today's meeting ahead of first-half results due tomorrow but it should have made up its mind by month-end.

The airline, which has said it must find £228 million to keep flying into 2004, is expected to detail how it plans to tackle losses of millions of francs and survive in the airline industry.

Analysts say it must show progress on capacity reduction and cost-cutting measures to stand a chance of getting fresh cash from an outside investor and be invited to join an alliance.

Swiss public and private investors who helped launch Swiss with a 1.2 billion-franc capital injection have said that they had no interest in spending more money on the carrier whose earnings have suffered from slumping demand.

Swiss is trimming its network, laying off staff and grounding aircraft not only to boost efficiency and adjust costs to fallen revenues, but also to become an attractive alliance partner with an acceptable, unthreatening, market position.

BA in the past has kept Swiss out of the oneworld alliance, seeking to protect its own competitive position. Swiss paper Tages-Anzeiger said on Saturday that Swiss and Lufthansa were talking about an integration of Swiss into Lufthansa with Swiss keeping its brand, preserving the tell-tale red tail with white Swiss cross on its aircraft.

Swiss would get a slot in the Star Alliance in which the German airline is a key partner, keep its role as a premium carrier and be an independent unit within the Lufthansa group, which should help ease popular concern about the airline which as the successor to collapsed Swissair is a Swiss national icon

[ettore]

True, Studi. But the SonntagZeitung wrote last Sunday of LX-CEO Andre Dose trying to convince BA and AA to take a stake in Swiss, not that BA or AA are willing to do so. The fact that BA denied on Monday any interest in such a move, does not impair the on-going negociation with oneworld.

Still, a lot of what has been written in the past weeks looks very much as wishfull thinking steaming from Swiss-managers desesparatly seeking a solution and playing BA against LH over the medias.

The 2003 H1 results show a loss of 508 millions Swiss francs (including 175 for retructuring costs), i.e. a daily cash burn over six months of 2,79 millions.

[MarkD]

http://www.unison.ie/irish_independent/stories.php3?ca=185&si=1030713&issue_id=9664
BA denies seeking stake in Swiss

BRITISH Airways denied yesterday that it was looking for a stake in struggling Swiss International Air Lines, but continuing speculation about a takeover by a larger rival kept Swiss shares buoyant.

"We are not actively seeking to invest in Swiss," said a spokeswoman for BA. "Our focus is on our core business."

The British flag carrier is spearheading Europe's most ambitious reforms, including job cuts expected to reach 13,000 by September. BA, the leading European member of Oneworld alliance, has a stake in Spanish alliance partner Iberia but for now is not shopping for more.

The Swiss SonntagsZeitung newspaper said on Sunday that BA was interested in a stake in Swiss, while German carrier Lufthansa might be willing to take a controlling interest, reports of which have surfaced repeatedly in the Sunday press, fuelling a jump in Swiss shares.

The loss-making airline is due to publish mid-year results today and it is expected to provide an update on planned cost cuts that are vital to its survival.

A spokesman for Oneworld said it formally invited Swiss to join the alliance last week, pending the Swiss carrier reaching an agreement with BA.

"Swiss asked us to confirm in writing our position and that we have done," Oneworld spokesman Michael Blunt told Reuters.

"In summary, we confirmed once again that Swiss would be welcome to join Oneworld, but first it must conclude a bilateral agreement with our existing member, British Airways." Swiss shares surged almost 12pc yesterday before BA's denial, though turnover was just over $1m as the shares are closely held.

They closed 10pc higher at Sfr13.20.

Swiss chief executive Andre Dose recently met BA officials in London to discuss Swiss joining Oneworld, but analysts say Swiss may first have to carry out planned cuts on routes that overlap with BA.

Swiss was formed after a $2bn bailout last year grafted parts of bankrupt Swissair on to regional carrier Crossair. (Reuters)

[hanger35]

British Airways is on a roll with Swiss
By Jason Nissé
24 August 2003


British Airways is in talks to create a full-blown alliance with Swiss, the airline created out of the near-collapse of Swissair two years ago.

It is understood that not only would Swiss join BA's OneWorld alliance but that it would also apply to the European Commission for "anti-trust immunity" for an alliance to share routes, landing rights and facilities.

BA already has such a deal with Qantas, the Australian carrier, and has applied to Brussels for approval for a similar deal with Iberia of Spain. A deal with American Airlines was dropped two years ago after regulators demanded too many concessions, though BA hopes to resurrect it in the future.

BA has also held talks with KLM, the Dutch airline it tried to merge with three years ago. However, KLM appears more likely to strike a deal with Air France, which will take a 25 per cent stake in KLM. BA was not prepared to buy any shares in KLM.

The Swiss deal depends on the airline agreeing to substantial cuts in staffing and the number of long-haul aircraft it operates. Swiss last week revealed a loss of SFr333m (£150m) and admitted it was in talks aimed at forging an alliance.

BA would not comment on plans to strike a deal with Swiss but its chief executive, Rod Eddington, said: "OneWorld is talking to both the Dutch and the Swiss." He said he hoped to get a ruling from Brussels on the Iberia deal soon, and was confident a deal could be reached.