After the approval by the federal councils of the commitment loan, Swiss plans a cautious restart, but this is capital-intensive. The first tranche is expected to flow around 300 million at the beginning of June.
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In summer, the smaller planes should preferably be used.
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“I am happy, grateful and relieved that we now have a solution for Swiss.” That said the head of the Swiss group, Thomas Klühr, after the federal councilors approved the commitment loan of CHF 1.275 billion for Swiss and Edelweiss on Wednesday. At a conference call, Klühr together with CFO Markus Binkert showed how things could now go on. There should not be any layoffs for the time being, although a capacity reduction of the order of almost 20% is part of the conditions negotiated with the banks and the federal government to obtain the loan.
There will be no quick recovery
In the question and answer session with journalists, Klühr emphasized several times that it is currently extremely difficult to make a forecast for the time after Corona because one does not know which markets will open when and under what conditions. If the loans are signed with the banks according to plan in the next few days, the way is clear in any case, so that the two airlines apparently receive money in several tranches.
At the end of May or beginning of June, around CHF 300 million will be drawn jointly for Swiss and Edelweiss, in line with a business plan; that should last at least until the end of the year. The aim in summer is to use approximately 15 to 20% of the previous flight plan, preferably with smaller aircraft. In other words, the A220 is often used on short and medium-haul routes, the A330 or A340 rather than the Boeing 777 on long-haul routes. It is imperative to maintain close cooperation with Helvetic Airways. “Helvetic Airways is and will remain an important partner,” said Klühr.
If it runs according to a scenario that Klühr describes as “conservative and cautious”, Swiss should get around 50% of its previous traffic performance towards the end of the year. A lot is uncertain because markets could suddenly close again in the event of a second corona wave.
Good customer for the tour operator
Klühr continues to do everything it can to avoid having to lay off workers despite a considerable reduction in capacity, which is also a request made by the federal government. In any case, the commitment loan also entails the obligation that certain measures must be taken in the event of redundancies due to restructuring. Swiss has made a hiring freeze and wants to cushion the reduction through the natural fluctuation rate, the promotion of part-time models and early retirement if possible.
The climate protection goals formulated by the federal government should also be followed. What particularly pleases the tour operators is their consent to make refunds by the end of September in accordance with the Package Travel Act; however, Swiss hopes that a solution for the issue of vouchers will be achieved at European level instead of reimbursement of ticket costs. Klühr asked for patience and said that they knew that customers were asked a lot when it came to reimbursements. But all airlines were fighting against the outflow of liquidity, and according to Klühr, many would be bankrupt if they had made large-scale and quick refunds for tickets that had not flown.
Resurrection of the Aviation Foundation
The commitment loan approved by Parliament is also subject to various conditions, as Klühr and Binkert explained. In the coming months, an aviation foundation in Switzerland will monitor that Zurich and Geneva will not be disadvantaged when it comes to starting up the networks in competition with Munich and Frankfurt. Since the traffic figures for the Lufthansa Group’s hubs are known exactly, monitoring should not create any problems.
CFO Binkert, who previously worked for Lufthansa in Munich, recalled the advantages for Swiss as part of the Lufthansa group. From an overall perspective, the networks within the group could be coordinated. This model has proven its worth since Lufthansa took over Swiss in 2005. One of the big open questions now is when and under what conditions Germany will give Lufthansa bridging finance.
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