This article from NYTimes.com has been sent to you by psa188@juno.com. Swiss Airline Plans Cutbacks to Trim Costs November 20, 2002 By ALISON LANGLEY ZURICH, Nov. 19 - Swiss International Air Lines, the successor to Swissair, said today that it would lay off 300 workers, ground eight planes and cut some routes, moves that come at a time of tough competition and grim global economic prospects. The airline, known as Swiss, said the moves were part of a larger effort to break even next year. Other steps include bolstering its technological services, where it plans to add 200 jobs, and upgrading its business-class section. Swiss also announced that it had lost 135 million francs ($92.8 million) in the third quarter - typically the best time of year for airlines - and its chief executive, André Dosé, said at a news conference that the fourth quarter would be even weaker. Some analysts questioned the wisdom of the company's strategy. Investors sent the shares down 4.1 percent, to 31.35 francs. So far this year, the illiquid stock has fallen 32 percent. Mr. Dosé and Pieter Bouw, the chairman of Swiss, who also spoke at the news conference, attributed the woes to the weak economy, the threat of terrorism and the prospect of war in Iraq, all of which have dampened airline travel in general. Swiss has lost 582 million francs ($400 million) this year. It has budgeted a loss of 1.1 billion francs for 2002, and it has said that it expects to meet that target. The airline rose out of the ashes of Swissair, which had been the country's flagship carrier. Swissair became a national embarrassment when it grounded its planes in October 2001 and sought court protection from creditors. Its regional carrier, Crossair, emerged as the new flagship carrier. It added intercontinental flights, using two-thirds of Swissair's planes, and recast itself as Swiss, billing itself as the premier airline for the business traveler. The company has the fourth-largest fleet in Europe, behind Lufthansa, Air France and British Airways. Mr. Bouw said that trying to compete with those powerhouses out of Switzerland, one of the most expensive countries in the world, made his job even harder. Since Swissair's collapse, Lufthansa has quickly increased its advertising and plane schedule out of Zurich. Mr. Bouw would not say whether his company would meet its stated goal of breaking even next year, but he did say that it had to cut costs to make a profit in 2004. "The current political and economic climate is far from sunny," Mr. Bouw said, "and it is especially difficult to keep pace with our global competitors from a high-cost country such as Switzerland." To compete, the airline is focusing on the high-end business market, aiming to increase the differences between business and economy class. Earlier this year it hired the Canadian trends consultant Tyler Brűlé to advise it on matters of style. But some analysts have been skeptical of the wisdom of such a focus, saying that in this era of downsizing and cutbacks by corporations and tourists, travelers are increasingly attracted to the no-frills carriers in the lucrative short-haul flights. Analysts also questioned whether the across-the-board job cuts announced today were enough to keep the airline economically healthy. "It is relatively easy to say they won't break even next year," said Christoph Bohl, an analyst at Bank Sarasin et Cie. "They need to get more customers," Mr. Bohl added. "To do that they would have to lower their prices, but economically, they can't do that." Matthias Egger, an aviation analyst at Pictet et Cie, said that to stay profitable, Swiss would have to increase prices around 10 percent next year - a hard sell to potential passengers. "To increase your price while an increasing number of airlines are offering cut-rate prices - I think that is difficult to achieve," Mr. Egger said. Both analysts predicted that Swiss would have to make further drastic cuts next year, including grounding more planes and cutting more routes. http://www.nytimes.com/2002/11/20/business/worldbusiness/20SWIS.html?ex=1038805378&ei=1&en=91ce96fa74917239 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company