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Swiss joins Oneworld alliance

Oneworld partners include American Airlines, British Airways, Finnair and Iberia Keystone Archive

The national airline, Swiss, has announced it is to join the Oneworld global aviation alliance.

This content was published on September 23, 2003 - 14:47

Membership of the nine-strong club is expected to bring benefits of around SFr100 million ($74 million) a year to cash-strapped Swiss.

Swiss chose to join Oneworld in preference to linking up with the German carrier, Lufthansa, which would have amounted to a takeover.

The national carrier also struck a separate deal with British Airways, paving the way for cooperation in a number of areas.

The terms - due to be formalised at the end of October - require the two parties to establish joint-venture flight operations between Switzerland and Britain.

This will include codesharing and gives the British carrier access to eight of the 14 daily landing and take-off slots that Swiss has at London's Heathrow airport.

In return, British Airways has agreed to a credit facility worth SFr50 million for Swiss.

"[The Swiss-British deal] will improve flight connections between Switzerland and England," added Swiss chief executive André Dosé.

However, he said regulatory approval from the European Commission could be six to eight months away.

Oneworld

The Oneworld alliance currently operates nearly 9,000 flights a day to 570 destinations in more than 130 countries.

Swiss said in a statement that membership would benefit Zurich airport as other members intended to direct more of their services via the Swiss hub.

Announcing the news, Swiss chairman Pieter Bouw said membership of the alliance would create more confidence in the national carrier.

But he acknowledged that the company still had a lot of work to do on the home front.

"We have to forge ahead with our planned restructuring. We must ensure that we conclude it successfully," said Bouw.

Dosé said Swiss customers stood to gain from the deal.

"Swiss as well as Oneworld clients will benefit from the enhanced network and the joint frequent flyer programme," he said.

Oneworld chairman Keijo Suila said he was delighted to welcome Swiss on board.

Credit talks

Swiss's chief executive also revealed that the company had held talks recently with its shareholders, major Swiss and international banks, and the Swiss government on establishing further lines of credit.

"It is important to have credit facilities in emergencies, but more negotiations are needed. But I'm happy to say that things on this front are moving in the right direction," emphasised Dosé.

Dosé added that the deal had come at a time when the company's restructuring programme - designed to save SFr1.6 billion a year - was progressing well.

"Losing staff is always painful but [the staff-reduction programme] is 80 to 90 per cent complete. We have also reduced our overheads and are confident of achieving our goal of cutting them by 50 per cent," he said.

Financial problems

On Monday, Swiss suspended its shares until 1200 GMT on Tuesday.

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 repositioned itself, launching a new low-cost fare structure across its European network.

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, Faryal Mirza and Jacob Greber

swiss brief

Swiss has joined the Oneworld airline alliance, headed by British Airways and American Airlines.

Membership could bring benefits of SFr100 million ($74 million) a year.

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

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