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Decision day dawns for Swiss

Odds are on that Swiss has made a pact with British Airways' Oneworld alliance Keystone

The national airline, Swiss, is set to announce whether it will join the Oneworld global aviation alliance or team up with the German carrier, Lufthansa.

This content was published on September 23, 2003 - 09:47

The Swiss management board is expected to announce the decision at a press conference at 10am on Tuesday.

Media reports suggest that the crisis-ridden national airline has already decided in favour of Oneworld, which counts British Airways and American Airlines among its members.

The Financial Times said a deal with Oneworld would see the British carrier acquire a "significant number" of Swiss's take-off and landing slots at London's Heathrow airport in exchange for an immediate cash injection.

On Monday, Swiss suspended its shares until 2pm Swiss time on Tuesday. The carrier declined to comment, but said it would hold a press conference on Tuesday where it would announce “key decisions”.

An alliance has long been mooted as a way for Swiss to keep flying, after struggling to survive industry overcapacity and falling passenger demand.

After launching in April last year, Swiss has been steadily losing money. It is currently in the midst of a massive restructuring plan that will see its staff and fleet cut by a third.

The carrier has also tried to reposition itself by launching a new low-cost fare structure across its European network.

Investors, who have seen their shares in Swiss fall by almost a fifth since the start of the year, have welcomed the move, which takes effect during the autumn.

Financial problems

Whatever it decides, it is likely that Swiss will be forced to cut its route network further.

Swiss is in the process of dramatically scaling back the size of its operations. Last week, it cut its flights to Washington DC, and in October it is due to cut a quarter of its destinations.

Swiss has faced massive financial problems since it was created out of the defunct Swissair in March 2002. It currently needs around SFr500 million ($368 million) in cash to secure its balance sheet.

During its first year of business, it lost SFr980 million.

Swiss has blamed its ongoing financial troubles on the weak global economy, the Sars crisis in Asia, the Iraq war, and major changes in European air travel due to the increasing influence of low-cost carriers.

swissinfo

swiss brief

Swiss could either join the Oneworld airline alliance, headed by British Airways and American Airlines, or team up with the German carrier, Lufthansa.

The latter alternative would likely involve a full takeover by Lufthansa, forcing Swiss to cut many of its routes.

Swiss is struggling to stay airborne and urgently needs a cash injection of SFr500 million to secure its balance sheet.

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