MIAMI – Considering the continuing global coronavirus pandemic and the consequent structural changes in its markets has brought SWISS (LX) to a conclusion that a restructuring of the company now seems inescapable.
SWISS has announced this new and painful decision via a press release issued last week by which the carrier details the actions to be taken and adapt to what is still an ongoing negative global market situation.
The airline sees, in the medium-term future, a structural decline of 20% in overall demand, and to respond to this deceiving future outlook, LG plans to downsize its fleet by 15% compared to the 2019 numbers.“…despite the actions which we were swift to take in response, a restructuring of our company now sadly seems unavoidable.” Dieter Vranckx, SWISS CEO Click To Tweet
“It has grown increasingly clear that our market is undergoing structural change, and that despite the actions which we were swift to take in response, a restructuring of our company now sadly seems unavoidable,” says LX CEO Dieter Vranckx.
Swiss Workforce Resized
The situation also implies that the workforce is resized via voluntary leave and natural staff turnover, an action that has been undertaken since 2020. To achieve this downsizing in the workforce LX estimates that a reduction of 1,700 full-time positions, over 20%, is becoming necessary.
This could force LX to proceed by forced dismissals for up to 780 ground and flying personnel and consultations with social partners have been initiated in order to find solutions that are socially acceptable.
Notwithstanding the measures now being planned, all the agreements with the Swiss Confederation regarding bank loans guarantees, “i.e. that LX’s flight program should continue to be developed in proportion to the overall flight program of the airlines of the Lufthansa Group”, would continue to be met.
The carrier will maintain its premium positioning, continue its operations from both Zurich (ZRH) and Geneva (GVA) while ensuring that Switzerland remains connected with the world.
Comments from Swiss CEO
Vranckx continued commenting on the situation by adding “With our new ‘reaCH’ strategic program, we are aligning ourselves to the changed market situation, reaCH includes a corporate resizing and transformation that should achieve sustainable overall cost savings of some US$553m (CHF 500m). Our aim is to repay our bank loans as promptly as possible and to sustainably retain our competitive credentials and regain our ability to invest.”
In regard to its fleet, LX plans to reduce its actual fleet of 90 aircraft, a resizing in line with the decline in demand, with a total fleet reduction expected to be around 15% from its 2019 size.
As a result, the short and medium-haul fleet would be reduced from 69 to 59 aircraft by withdrawing the Airbus A320-family aircraft along with a reduction of the wet-lease operations with Helvetic Airways (2L). In regard to the long-haul aircraft, LX plans to withdraw five Airbus aircraft and reduce the fleet from 31 to 26 aircraft.
A similar reduction will also apply to frequencies, in accordance with the decline in demand, when compared to the 2019 flights program. This will affect both short, medium, and long-haul routes with the possibility that certain intercontinental direct connections may not yet be resumed at all.
Featured image: Swiss Airbus A330-300 HB-JHD. Photo: Fabrizio Spicuglia/Airways