• Joe Breitfeller

SWISS Announces Major Restructuring In Response to Structural Market Changes

SWISS has announced plans to restructure in view of structural market changes resulting from the global COVID-19 pandemic. The company expects to see a 20 percent decline in overall demand moving forward and will downsize their fleet by 15 percent versus 2019.

SWISS Boeing 777 - Courtesy Swiss International Air Lines

On Thursday (May 6, 2021), Swiss International Air Lines (SWISS) announced that they will restructure due to structural market changes. The carrier expects to see an overall decline in demand of 20 percent, and will therefore reduce their fleet by 15 percent compared to 2019 levels. SWISS will also continue to reduce and optimize their workforce through voluntary measures and natural attrition which has been underway since 2020. The total downsizing will impact around 1,700 full-time positions, a staff reduction of over 20 percent compared to pre-pandemic levels. The restructuring could also include forced dismissals of up to 780 ground and flying personnel. SWISS will continue to pursue their premium position, maintaining operations in Zurich and Geneva to ensure Switzerland remains connected to the world.

In Thursday’s announcement, Swiss International Air Lines’ CEO, Dieter Vranckx, said,

“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. In the medium-term future, SWISS expects to see a structural decline of 20 per cent in overall demand. With our new ‘reaCH’ strategic programme, 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 CHF 500 million. 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.

“I immensely regret that, after so many years of success with such a great team, we now have to consider such a painful step. Unfortunately, the situation remains challenging in the extreme, and continues to demand rigorous cost discipline and efficiency. We are convinced, though, that with the restructuring we envisage, we would emerge from this crisis all the stronger and all the more able to return SWISS to sustainable success in the ‘New Normal’.”

As part of the restructuring, the current SWISS fleet of 90 aircraft, as well as those of Helvetic Airways, which operate on behalf of SWISS under wet-lease agreements, will be resized in alignment with the decline in market demand. As a result, the company’s short and medium-haul fleet will be downsized from 69 to 59 aircraft through the removal of Airbus A320s and a reduction in wet-lease operations. SWISS will also reduce their long-haul fleet from 31 to 26, by withdrawing five long-haul Airbus aircraft.

As a result of a decline in structural demand, SWISS will reduce frequencies from 2019 levels on all short, medium and long-haul routes. Additionally, service may not be restored at all on some intercontinental routes. By the end of 2021, SWISS expects to have achieved a reduction of over 1,000 full-time equivalents (FTEs) through voluntary measures and natural attrition. However, the company now sees a further downsizing as inevitable, impacting up to 780 employees (650 FTEs) including around 200 ground personnel, 60 at SWISS Technics, 400 cabin crew and 120 pilots. The overall reduction will result in the elimination of around 1,700 FTEs, or a 20 percent workforce reduction compared to 2019 levels.

SWISS has now initiated a consultation period with their social partners, employees and unions to find solutions to keep forced dismissals as low as possible. All measures taken will comply with the provisos under which the Swiss Confederation undertook to guarantee SWISS’s bank loans. ‘Sozialplan’ benefit plans are already in place for all personnel except cockpit personnel, who are subject to a collective labor agreement. For cockpit crew, a solution must now be found with the pilots’ AEROPERS association at the negotiating table. The consultation period and evaluation are expected to be completed by mid-June 2021.

Even after restructuring, SWISS will continue to operate a large part of their previous network and the carrier remains committed to their Zurich and Geneva hubs. SWISS’ premium positioning remains unchanged and the airline will continue to offer First Class on all long-haul flights. The company will also continue to modernize their fleet and explore further intermodal transport solutions. Additionally, collaborations within the Lufthansa Group will be intensified and further synergies leveraged, while further cooperation with sister carrier Edelweiss will be explored.

Source: Swiss International Air Lines