National airline lands in Germany after 74 years

0 Comments | Swiss News, May, 2005

The Swiss are still weighing the fallout of this month's news that the failing national airline, Swiss, will be sold to Deutsche Lufthansa AG. Lufthansa, based in Germany, will ante up as much as 481 million CHF to buy out shareholders--which include the Swiss government--so ending 74 years of independence in aviation for Switzerland.

Swiss had racked up losses of 1.81 billion CHF since 2002, when it rose from the ashes of a bankrupt Swissair Group in a 4.2 billion CHF bailout by the government and the country's biggest companies. Analysts said Swiss was too big for its domestic market of 7.4 million people and, despite cutting a third of its workforce and a third of its fleet, it never generated a profit. Lufthansa, which is Europe's second-biggest airline behind Paris-based Air France SA, hopes the Basel-based "Swiss" will help it to gain destinations outside Europe.

The airline industry has been in a global slump since the terrorist attacks of Sept. 11 2001. All carriers are facing fierce competition from shorthaul carriers like Ireland's Ryanair Plc and England's Easyjet Plc. Belgium's Sabena SA collapsed in 2001, while Italy's Alitalia and Scandinavian Airlines are unprofitable.