SWISS has today revealed plans of a significant restructuring planned at the airline. Along with the elimination of 10 of its short-haul aircraft and a reduction in wet-leased capacity, it will retire five of its long-haul Airbus aircraft. Given the focus on efficiency and the strategic direction of the Lufthansa Group as a whole, these are highly likely to be the A340-300s.
Is it the end for the A340?
Despite extensive cost-cutting measures, SWISS is set to undertake a radical restructuring which will see a shakeup of the fleet and employees.
SWISS CEO Dieter Vranckx said that, given the continuing absence of a meaningful market recovery, a further restructuring of SWISS was inevitable. In the medium-term future, SWISS expects demand to remain depressed by some 20%, and as such, significant changes are needed. Vranckx commented,
“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.”
The airline is targeting savings of some CHF 500 million ($550 million) as a result of its restructuring. This, it says, will be used to repay bank loans as soon as possible in order to regain its ability to invest.
The first revelation regarding the shape of this restructuring is that SWISS intends to downsize its aircraft fleet by 15%. The short and medium-haul fleet will be downsized from 69 to 59 aircraft. This will be achieved by withdrawing some Airbus A320 family aircraft, as well as reducing its wet lease capacity.
The airline currently flies 21 Airbus A320 family jets, three of which are A320neos. Of the 18 A320-200s in the fleet, all but one are currently parked. 13 of the A320-200s are 23 years of age and older, so many of these could well exit the fleet. The ‘leased capacity’ comes from Helvetic, and could see the six E190s no longer flying for SWISS.
On the long-haul side, the airline plans to cut its fleet by five aircraft, from 31 to 26. While the airline didn’t go into detail on which aircraft this might be, it’s notable that the airline operates exactly five of the aging quadjet A340-300.
All are over 17 years of age. Retiring these birds would be in line with the Lufthansa Group’s strategy to take the most inefficient aircraft out of its fleets. The airline declined to confirm to Simple Flying which Airbus aircraft would leave the fleet.
The loss of the A340, while somewhat predictable in the current climate, would be a blow for SWISS. The airline had only completed its cabin refurbishment program for the entire fleet of five at the end of 2020. All the aircraft had new first and business class hard products, as well as WiFi and new entertainment systems. The refurb had cost SWISS around CHF 100 million ($110 million) to complete.
780 jobs at risk
Alongside the downsizing of the fleet, SWISS will be looking to trim its staff numbers too. The airline said today that up to 780 employees could be affected by the restructuring. Under its previous cost-cutting measures, 1,000 full-time equivalent positions will have been eliminated by the end of 2021. Now that number is set to increase.
SWISS warns that the affected staff could include 200 ground personnel, 60 from SWISS Technics, 400 cabin crew and 120 cockpit staff. This will reflect a reduction of around 650 full-time equivalent positions, making the SWISS workforce 20% smaller compared to 2019. Vranckx commented on the employee-related measures saying,
“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’.”
The airline has now begun its consultation process with social partners, employees and their representatives to avoid as many forced dismissals as possible. The consultation process will be concluded by mid-June.