High debts, high kerosene prices and a bumpy start after the Corona crisis: Swiss also has to spell back so that passengers do not experience any nasty surprises in summer.
Swiss finds it difficult to switch quickly from crisis mode to “normal operation”.
After the outbreak of the pandemic, dozens of Swiss planes were lined up at the airport. Terminal E at Zurich Airport has been completely shut down. These pictures triggered memories of the Swissair grounding a good 20 years ago. But the Lufthansa subsidiary was cushioned by state-guaranteed bank loans of over 1.5 billion francs.
Terminal E has now been back in operation for almost a year, and Swiss is also showing signs of life. She also wants to replace the state-guaranteed loan this quarter and thus end the chapter on state aid. But anyone who thought that the ramp-up of operations would be smooth is mistaken. Airlines like Swiss currently have five challenges to overcome.
1. Gaps in staffing
The “new” Swiss is significantly smaller than before the crisis: it still has 6,000 full-time positions and around 85 aircraft. The workforce has been reduced by around a fifth and the fleet by 15 percent. The deep cuts at some airlines and flight-related operations are evidence of the industry’s struggle for survival, as no one knew how long the pandemic would last. In addition, state aid without massive austerity measures would hardly have been justifiable.
Now, however, the severe downsizing is slowing down the upswing. Swiss is not alone in this: Also about Easyjet, Ryanair, British Airways or Frankfurt Airport operator Fraport report bottlenecks. Around 330 flight attendants were fired at Swiss. Since April, however, more than half of these people have returned, explains Swiss. The controversial compulsory vaccination also causes people to leave. The airline explains that 150 people are affected, although it will only become clear at the end of the year how many layoffs have been made as a result.
The severe downsizing led to more pressure and frustration for the remaining staff. CEO Spohr said he was certain that Swiss would be able to bring employee satisfaction back to where it belongs. This can certainly be seen as criticism of Swiss boss Dieter Vranckx.
For the upcoming summer business, the staffing level remains thin. Swiss is therefore reducing frequencies on various long-haul routes: New York, San Francisco, Los Angeles, Chicago, Tokyo, Bangkok, Singapore, Hong Kong, Dubai and Johannesburg. The number of canceled flights is “in the low single-digit percentage range”, it says on request. According to a spokeswoman, 70 to 80 percent of the capacities of 2019 will be offered in the summer flight schedule. However, it is striking that this is less than the Lufthansa Group average.
2. The strong increase in demand
The largest tour operator Hotelplan Suisse says on request that bookings in March and April for the summer season are more than 10 percent higher compared to the same period in 2019. Overall, however, one is not yet at the level of 2019, since hardly any summer holidays were booked in the winter months.
The most popular travel destinations for Swiss people are Greece, Spain, Cyprus, Turkey, the USA, Egypt and Italy. Swiss also speaks of a currently very strong demand, on long-haul routes, especially for flights to the USA, Thailand and India.
3. Bottlenecks throughout the “ecosystem”
Not only airlines, but also aviation service providers had laid off a lot of staff during the crisis, which aggravated the problems. The global ground handler Swissport still had 45,000 employees in 2021, compared to 64,000 in 2019. Swissport therefore wants to hire 17,000 people by the summer. That would be almost as many as before the crisis.
In Zurich, Swissport has enough staff to cover the announced flights, writes a spokesman. Passenger and flight volumes for the summer are expected to increase to 80 percent of pre-pandemic volumes. In order to be prepared for this, Swissport is hiring 500 employees at the Zurich location.
At the same time, corona restrictions continue to apply in many countries, which makes check-in checks tedious. In Zurich, passengers should therefore be at the airport three hours before departure. At Flughafen Zürich AG, which is responsible for the infrastructure, there is no acute shortage of staff, says a spokeswoman. Compared to other airport companies, only a small number of jobs were cut.
4. Mountains of debt and losses
Swiss alone has made a combined loss of one billion francs in the past two years. Lufthansa boss Carsten Spohr recently told the “CH Media” newspapers that the group’s debt was 10 billion euros higher than without the pandemic. The rating agencies had set the creditworthiness of the Swiss parent company to “junk status” after the outbreak of the crisis.
The industry organization Iata expects airline losses to total $200 billion between 2020 and 2022. However, Swiss wants to be in the black again this year. In the traditionally weak first quarter, the minus of 47 million francs was still a quarter of the previous year. She therefore sees herself on course for the year as a whole.
5. Business customers make themselves rare
The industry then encountered headwind from the high energy prices. Lufthansa, for example, secures two-thirds of purchases in terms of price, but ultimately prices will rise. If a barrel of oil goes up by $10, the airline ticket will also go up by around $10. Nevertheless, the Lufthansa boss expects private travel to recover completely in the coming year.
In the case of lucrative business trips, it takes longer – or earlier levels are no longer reached. By the end of the year, the Lufthansa Group is expecting 70 percent of the 2019 level. This is not only due to the video conferences. Rather, service companies in particular can reduce their CO2-Simply reduce footprint if your employees fly less.
In return, tourists often treat themselves to more space – in business class or in premium economy, which Swiss recently introduced. However, it is also clear that passengers only pay a surcharge if the flight schedule is stable. Nothing is as bad for the image as stranded passengers in the holiday season – especially for an airline that sees itself as a premium airline.
Carsten Spohr said on Thursday that the crisis is now mentally over and going on the offensive again. But the personnel problems at Swiss and in the entire aviation ecosystem show that a lot still has to be done so that the rediscovered desire to travel does not end in frustration.