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Swiss to join OneWorld Alliance

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It's official. Press releases everywhere. It will become a full partner in early 2004. There are also some side deals between Swiss and British Airways(also A OW partner) for flights within Europe.

I gues the Lufthansa buy-out fell through, or Swiss got a better deal with OW.

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    Here's some perspective (or spin ;) ) from someone living in Switzerland and working in the travel industry (though thankfully NOT for Swiss or one of their direct competitors...).

    Joining OneWorld provides Swiss with one major advantage: their TravelClub FF program will be discontinued & all miles transferred to BA's Executive Club. This eliminates the concern of many frequent (business) flyers that they could lose miles/status in the near future if Swiss were to go belly-up. These travelers will thus be more inclined to book on Swiss (again).

    However, that's about the only real advantage for Swiss that this deal provides. They are still in a severe cash crunch and need at least 500 million francs by the end of the year to survive. This deal only provides them with a 50 million guarantee from BA - and that came at the price of more than half Swiss's slots at Heathrow (8 of 14), which now belong to BA!

    On top of it all, the only significant OW carrier Swiss doesn't already have a partnership with is BA - AA, Cathay, Qantas and Iberia are already partners. So, it just makes me laugh when the CEO of Swiss talks of 100 million a year in extra MARGIN from this new agreement!

    In summary, this isn't bad news by any means, but it just doesn't address the main problem, namely Swiss's weak balance sheet (which has severely deteriorated less than 2 years after a huge recapitaliization). Unless new funds flow in the next few months, Swiss is history.

    Since Swiss parlamentary elections take place at the end of October, I wouldn't expect any additional funding agreement to be reached before then. That's because the goverment is the airline's largest shareholder and no politician is willing to hint that still more taxpayer money might be headed towards Swiss - at least until he/she is reelected :) .

    Hope this helps,
    Andre

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    Good perspective Andre. I am sure you remember the Sabena/Swissair deal, what a mess.
    I do not think it is cut-and-dry as BA getting those slots will no doubt upset the likes of BMI and Virgin.
    Lufthansa and Star seem be going from strength to strength, certainly in Asia the Lufthana/Thai/Singapore Airlines/United partners of Star are providing great travel opportunities, the OW of BA/Cathay/Qantas still has too many 'gaps' in the network.

    I am still convinced that the Swiss/Swissair problems stem from the days when they were offering some of the cheapest tickets going, operating to strange African places where few other airlines bothered with such high Swiss overheads.

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    JamesA,

    Thanks for the kudos!

    I fear that I didn't explain the slot thing clearly... there are actually 2 components to this as far as I can tell:

    1) a slot-sharing agreement between Swiss (LX) and BA for flights between Switzerland and LHR: LX and BA can codeshare and use each others' slots at each end.

    2) A 50 million CHF loan guarantee that BA is granting LX: LX put up 8 slots at LHR as collateral for this guarantee. What this means is that IF BA has to pony up the 50 million CHF because LX is in default, BA gets to keep the slots.

    Will Virgin and/or BMI raise a stink about this deal? Perhaps, but I imagine this is not a major issue for them.

    Hope this helps,
    Andre

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