Swiss International Air Lines has has made this announcement:

Swiss is currently faced with structural changes to its market, and expects to see a lasting 20-percent decline in customer demand in the medium term. Thanks to a constructive consultation procedure, however, the corresponding workforce reduction of 550 dismissals for operational reasons, including dismissals in the event of non-acceptance of changed employment terms, is smaller than was expected as recently as last month. In total, SWISS will have downsized its workforce by some 1,700 full-time equivalents by the end of 2021, with two thirds of this reduction achieved through voluntary measures and natural staff turnover. As projected, the SWISS aircraft fleet will also be reduced by 15 per cent. SWISS is living up to all its social responsibilities in all these actions, and is ensuring that these unavoidable dismissals for operational reasons pay maximum regard to all social considerations.

Against the background of the structural ramifications of the coronavirus crisis and what is expected to be a lasting 20-per-cent decline in customer demand in the medium term, Swiss International Air Lines (SWISS) initiated the consultation procedure which was required by law in view of its planned restructuring (see here for details) on 6 May. At the time, up to 780 SWISS employees among the company’s ground and flying personnel potentially faced dismissal for operational reasons (or dismissal in the event of their non-acceptance of changed employment terms) as a result of the projected 15-per-cent reduction in the size of the SWISS aircraft fleet.

After the conclusion of the consultation period which had subsequently been extended to a full three weeks, SWISS was able to reduce the number of such unavoidable dismissals for operational reasons to 550 together with its social partners. By the end of 2021, SWISS will thus have downsized its workforce by around 1,700 full-time equivalents or over 20 per cent, with two thirds of this reduction achieved through voluntary measures and natural staff turnover. The size of the SWISS fleet will be reduced by 15 per cent as previously envisaged. The rescaling and transformation of the company under its ‘reach’ strategic programme should result in savings of some CHF 500 million.

Fewer dismissals for operational reasons following consultation procedure

The consultation procedure conducted offered SWISS’s social partners, its employees and their representatives the opportunity to submit suggestions on how potential dismissals could be avoided or reduced in number and/or how their impact could be mitigated. Over 770 such suggestions were received from the company’s employees. As a result, SWISS has been able to lower the total number of dismissals for operational reasons required from 780 to 550, a reduction of around one third. The 550 dismissals include 58 employees who will simultaneously be offered revised employment terms such as a reduction in their degree of employment or a change to their function, who will thus have the option of remaining with the company under the new terms.

SWISS is therefore compelled to issue ordinary notice to terminate employment to 492 employees in and outside Switzerland. Of these, 334 are cabin personnel, 101 are ground personnel and 57 serve in SWISS Technics. No reductions are being made to the company’s cockpit corps numbers; but in consultation with the Aeropers pilots’ staff association, the present cockpit staffing surplus will be managed in particular through a prescribed corps-wide work hours reduction, subject to agreement thereto by Aeropers members.

“I am truly sorry for all our employees who are being served notice,” says SWISS CEO Dieter Vranckx. “And it is with the deepest of regret that we are having to take this radical action in response to the structural changes that our industry is experiencing. We are convinced, though, that this is the right course to take if we are to repay our bank loans, regain our ability to invest and retain our competitive credentials.”

SWISS will now aim to promptly conclude this phase of uncertainty and implement its rescaling and transformation with all possible speed. The dismissals required will be effected with full observance of all the stipulations made by the Swiss Confederation in connection with its guarantees for SWISS’s bank loan facilities, with full application of the relevant ‘Sozialplan’ severance benefits plans and with full regard to all further social considerations. All the employees concerned will also be offered the extensive services and support of a partner outplacement agency.

15 percent fleet reduction confirmed

The present SWISS fleet of more than 90 of its own aircraft and those operated on its behalf by Helvetic Airways under wet-lease arrangements will be reduced by 15 percent from its 2019 size as planned in response to the decline in demand. Which five Airbus long-haul aircraft (A330s or A340s) and which ten short-haul aircraft will be withdrawn to this end is yet to be decided. On the short- and medium-haul fleet front, the reduction in the number of Helvetic Airways aircraft operated on SWISS’s behalf will be proportionately higher than the number of SWISS’s own aircraft withdrawn. SWISS is also considering modifications to its route portfolio, reductions in frequencies and a delayed resumption of services to some long-haul destinations.

“In the future SWISS will be smaller. But it will also be more focused, more digital, more efficient and more sustainable,” says Vranckx. “The transformation planned will be conducted over the next three years through our ‘reach’ strategic program, with which we aim to realign our company to the changed market situation and achieve sustainable cost savings of some CHF 500 million.”

SWISS’s current production is still substantially below that of pre-pandemic times. In high summer, capacity is likely to be at around 50 to 55 percent of its 2019 levels. For 2021 as a whole, SWISS expects its total production to be about 40 percent of that of 2019.

In June and July SWISS will newly fly or resume services to 49 destinations from Zurich and Geneva, and will operate a total of 125 routes in high summer.

Top Copyright Photo: Swiss International Air Lines Airbus A321-271NX WL HB-JPA (msn 9417) ZRH (Rolf Wallner). Image: 951392.

Swiss aircraft slide show:

Swiss International Air Lines made this announcement:

In view of the continuing global coronavirus pandemic and the resulting structural changes in its markets, SWISS has concluded that a restructuring of the company now seems unavoidable. In the medium-term future, the company expects to see a structural decline of 20 per cent in overall demand. In response to this, the SWISS aircraft fleet should now be downsized from its 2019 extent by a projected 15 per cent. With due regard to the workforce resizing via voluntary measures and natural staff turnover that has been under way since 2020, this would also entail a total workforce reduction of around 1,700 full-time positions or over 20 per cent. It could also entail forced dismissals for up to 780 ground and flying personnel. SWISS has now initiated a consultation procedure to find solutions that are as socially responsible as possible, in collaboration with its employees and its social partners. Despite the restructuring measures now taking shape, all the stipulations of the Swiss Confederation in connection with its bank loan guarantees would continue to be met. SWISS will also continue to pursue its premium positioning, maintain its operations from both Zurich and Geneva and ensure that Switzerland remains connected with the world.

One year on from the outbreak of the global coronavirus pandemic, air transport activities remain very subdued. The impact of COVID-19 on aviation has been far more substantial than was the case with previous exogenous shocks, and has shaken the industry to an unprecedented extent. Swiss International Air Lines (SWISS) also finds itself confronted with the greatest challenge it has faced in its corporate history. The company responded swiftly to the pandemic’s outbreak and initiated comprehensive cost-saving measures to counter the crisis and the growing threat to its liquidity (for further details please see the media release on SWISS’s 2021 first-quarter results of 29 April 2021).

Restructuring now seems unavoidable

In view of the continuing absence of any industry recovery, a restructuring of SWISS that extends beyond the cost-saving measures already initiated now appears inevitable. “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 SWISS CEO Dieter Vranckx.

In the medium-term future, SWISS expects to see a structural decline of 20 per cent in overall demand. “With our new ‘reaCH’ strategic program, we are aligning ourselves to the changed market situation,” Vranckx continues. “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.”

Aircraft fleet likely to be downsized 15 percent

The present SWISS fleet of 90 of its own aircraft and the transports of Helvetic Airways which operate SWISS services on SWISS’s behalf under wet-lease agreements will be resized in line with the decline in demand, and is likely to be reduced by 15 percent from its 2019 size. As a result, the short- and medium-haul fleet would be downsized from 69 to 59 aircraft through the withdrawal of Airbus A320-family equipment and a reduction in the wet-lease operations. On the long-haul front SWISS plans to reduce its fleet from 31 to 26 aircraft, by withdrawing five of its long-haul Airbuses.

As a result of the declines in demand, frequencies are likely to be reduced from their 2019 levels on both short- and medium-haul and long-haul routes. In addition, services may not yet be restored at all on a few direct intercontinental routes. All these plans and proposals would continue to pay full regard to the Swiss Confederation’s proviso when guaranteeing the requisite bank loans, i.e. that SWISS’s flight program should continue to be developed in proportion to the overall flight program of the airlines of the Lufthansa Group.

Up to 780 employees could be affected

The envisaged downsizing of the SWISS aircraft fleet and the adoption of further measures would also have an impact on the size of the future SWISS workforce¹. By the end of 2021, the company will already have reduced this by over 1,000 full-time equivalents (FTEs) through a combination of voluntary personnel measures and natural staff turnover. But a further downsizing now looks impossible to avoid. As part of the resizing planned, up to 780 employees (650 FTEs) could be affected: around 200 ground personnel, 60 at SWISS Technics, 400 cabin personnel and 120 cockpit personnel. The resulting overall elimination of some 1,700 FTEs would be a reduction of more than 20 per cent from the workforce’s 2019 level.

In view of the structural change that is now being seen in the market, this action would need to be taken regardless of any further extension of the present short-time working arrangements. “I immensely regret that, after so many years of success with such a great team, we now have to consider such a painful step,” says CEO Vranckx. “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’.”

Consultation procedure initiated

The consultation procedure that has now been initiated in connection with the envisaged restructuring will see SWISS work with its social partners, its employees and their representatives to find further solutions which could keep the numbers of any forced dismissals required as low as possible and could ensure that any such dismissals were conducted with optimum regard to their social ramifications. This, too, would comply with the provisos under which the Swiss Confederation undertook to guarantee SWISS’s bank loans.

‘Sozialplan’ severance benefits plans are already in place for all SWISS personnel groups except its cockpit personnel. Since the present collective labour agreement for the company’s cockpit personnel includes protection from dismissal, a solution will now need to be found with the pilots’ AEROPERS association at the negotiating table to tackle the structural cockpit staffing surplus.

The consultation procedure and the subsequent evaluation phase are expected to be concluded by mid-June. SWISS will then communicate its corresponding decisions.

Premium positioning remains – even stronger emphasis on sustainability

As The Airline of Switzerland, even after any restructuring and with a smaller aircraft fleet, SWISS will still operate a large part of its previous network and thus continue to perform its mission of meeting the air transport needs of the Swiss economy, the people of Switzerland and the Swiss tourism sector in line with the new demands. To these ends, SWISS also remains fully committed to its two Swiss operating locations of Hub Zurich and Geneva, and will continue to provide direct intercontinental air services that keep Switzerland connected with the world. SWISS’s premium positioning will also remain unchanged: the company will, for instance, continue to offer a First Class on all its long-haul flights.

The resizing and transformation envisaged under the reaCH program also extend to an even stronger alignment of the SWISS business model to both sustainability considerations and structural change in the working world. This will centre in particular on steadily further modernizing the SWISS aircraft fleet, using sustainable aviation fuel and further developing and refining intermodal transport solutions. By adopting new work models and agile corporate structures, SWISS will also pay due and full regard to the structural changes in the working world; and the company will further continue to exploit all the new possibilities which are opened up by ever-growing digitalization.

Collaborations will also be intensified within the Lufthansa Group, with further synergies tapped. SWISS also aims to continue to strengthen its position within the Group by developing further competence centers, not least in the commercial area. And the already well-established collaboration with sister carrier Edelweiss will also be further pursued.