Swiss Airlines Dhanu Proj (1)

8/6/2019 Swiss Airlines Dhanu Proj (1)

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Swiss airlines

Swiss International Air Lines (SWISS) serves 72 destinations in 39 countries allover the world (as of summer 2011) from its Zurich hub and the further Swissinternational airports of Basel and Geneva with a fleet (as of summer2011) of 90 aircrafts. Switzerlands airline embodies typical Swiss values suchas hospitality, quality in every detail and personal care: SWISS aims to make allits customers feel totally at home.

SWISS is committed on various fronts to the careful and sustainable use ofnatural resources, and regards a responsible attitude to the environment as anintegral part of its corporate culture. As part of the Lufthansa Group and a

member of Star Alliance, SWISS remains true to its mission of providingquality air services that link Switzerland with Europe and the world

Only vision

We want to be the best airline of Europe

The airline was formed after the 2002 bankruptcy

ofSwissair, Switzerland's former flag carrier. Thenew airline's losses totaled $1.6 billion from startup

until 2005. Swissair's biggest creditors, Credit

Suisse and UBS, sold part of Swissair's assets to

Crossair, the regional counterpart to the transatlantic

Swissair (both Swissair and Crossair were under the

same holding company, called SAirGroup). Crossair

later changed its name to Swiss, and the new national

airline started its operations officially on 31 March2002. The airline was first owned by institutional

investors (61.3%), Swiss Confederation (20.3%),

cantons and communities (12.2%) and others (6.2%).

Swiss also owns subsidiary companies Swiss Sun

(100%) andCrossair Europe (99.9%). It has a total of

7383 employees.
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Airbus A340 at Narita Airport, Japan

Swiss International Air Lines, or "Swiss", was

founded from the remains ofCrossair. Crossair had40% of its income come from the defunctSwissair.

The first year was plagued with loss and the Swiss

government gave the airline the then-equivalent of

$1.5 billion, which was used up within two years.

According to Marcel Biedermann, the managing

director intercontinental markets for Swiss, there

were three possibilities: stay independent as a niche

carrier, shrink to an unrecognisable level, or attach

onto another airline group. The last choice was taken.

Swiss talked to Air France-KLM, British Airways,

and Lufthansa. However, Swiss was tied up with debt

and an uncertain future, and seemed to be an

unattractive investment. After merging with KLM,

Air France said they were too busy to deal with Swiss

joining them. Lufthansa wanted to take over, but the

Swiss people did not want that. British Airways wasopen, and Oneworld partners thought Zurich

Airport would be a viable alternative hub for London

Heathrow.

After almost a year of disputes, Swiss was finally

accepted into the Oneworldairline alliance, after

having been blocked by British Airways, which

competes with Swiss on many long-haul routes. On 3

June 2004, Swiss announced its decision not to join
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Oneworld because they did not want to integrate

their current frequent flyer program into British

Airways' Executive Club. Furthermore, Swiss

thought the relationship was one sided, where BritishAirways sapped out the benefits of the airline, but

they would get no return.

[edit]Recovery

A Swiss A340

Old First Class Cabin onboard Swiss International

Airlines Airbus A340-300.

Sanno Park Tower Annex, which has the Swiss House

( Suisu Hausu), the Japanese offices of

Swiss International Air Lines, in Chiyoda, Tokyo
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friendly and has three-class seating. From April 2009

as each A330-300 arrives, a A330-200 is retired from

the fleet. The first A330-300 jet was put into service

from Zurich to New York (JFK). In spring 2010Swiss operated five A330-300s on routes from Geneva

to New York (JFK), and Zurich to New York (JFK),

Delhi, Mumbai, Dubai and Muscat. From April 2010

the A330-300 flies from Zurich to Nairobi, Dar es

Salaam, Yaound and Douala. The remaining four

A330-300 aircraft are to join the fleet in 2011

Lufthansa Group takeover

Following Lufthansa Group takeover, the regional

fleet was changed from

Crossair's EmbraerERJs and Saabs to Avro RJs ,

which are flown by a wholly owned subsidiary, Swiss

European Air Lines. The rest of the fleet, apart from

the regional jets, was also rationalised and is now all

Airbus.

The airline reconstruction also caused Swiss to

renegotiate their supplier contracts, which include

ground handling, maintenance, food service, and

labour.

The shareholders of Swiss received a performance-based option for their shares. Payment will be in

2008, and the amount will depend on how well

Lufthansa's shares compare with competitors' shares.

Lufthansa continues to maintain Swiss as a separate

brand.

In 2010, Swiss and Lufthansa were named in

a European Commission investigation into price-

fixing, but was not fined due to acting as a
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whistleblower

How Swissair's former maintenance arm has transformed itself into the world'sbiggest independent MRO

Swissair's former maintenance arm has

transformed itself from in-house business to the world's biggest

independent MRO

In the six years since Swissair's demise, the airline's former technical armSRTechnics has been through a management buyout andconsolidation of theEuropean maintenance, repair and overhaul sector, been bought by an Arabian

consortium, and established itself as a global player, with partnerships andventures in the Middle East and Asia.While SR Technics' centre of gravity remains its 330,000m2, four-hangarfacility at Zurich airport, the SFr1.7 billion ($1.66 billion)-turnover MRO house- acquired in 2006 by a consortium including Abu Dhabi investmentarm Mubadala and Dubai Aerospace Enterprise - is today an internationally-

based concern. It has facilities at Dublin in Ireland and Stansted in the UK,which came with its 2004 acquisition of FLS Aerospace, as well as satelliteoperations in Bahrain, Cork, London Luton, Palma de Mallorca and Shanghai.

The FLS acquisition saw it claim the title of largest "independent" (non-airlineowned) MRO in the world, with around 5,300 employees.With new chief executive Bernd Kessler- formerly with Honeywell and MTU -not giving interviews during his first 100 days, it remains to be seen how a new"strategic alliance" with Mubadala, announced at November's Dubai air show,will increase SR Technics' presence in the Middle East. The company alreadyruns a line maintenance operation forGulf Airin Bahrain, and Mubadala hassaid SR Technics will subcontract component repair work to Mubadala's AbuDhabi-based MRO house ADAT (the former GAMCO), in which Mubadala

plans to invest $500 million over the next five years.
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At the time of Swissair's collapse, SR Technics was a fairly typical in-houseMRO. Although spun-off as an independent business in the late 1990s, half itsrevenues came from its parent airline. Nowadays, Swissair's successor Swiss -from which SR Technics split in a management buyout in 2002 - is still its

largest customer, but with a 15% share. The FLS acquisition brought in EasyJetin the UK (9%) and Aer Lingus (6%). Gulf Air makes up another 6%and Austrian Airlines, Cathay Pacific and Thai Airways are all significantcustomers. However, 53% of SR Technics' business comes from around 500other airlines, all of which individually represent less than 2% of turnover.Customer base

Although the company's customer base is still skewed towards Europe - with71% of revenues coming from the region - airlines from Asia-Pacific, theMiddle East and Africa make up almost a quarter of its business. Only 6% of its

turnover comes from the Americas, but any transatlantic foray to boost thatshare seems unlikely, given the mature and highly-competitive airline MROmarket in North America and the small and locally-catered for industry in LatinAmerica. However, recent major acquisitions by both DAE and SR Technics'compatriot Jet Aviation in the business aviation MRO sector shows the NorthAmerican market has not been written off by ambitious overseas suitors.SR Technics says the past two years have seen "the completion of our transitionfrom a traditional MRO to a global total services provider", offering "integratedsolutions" in three business units: aircraft maintenance and modifications,component repair and engine overhaul. Each represents about third of SR

Technics' revenues. The company will expand further into "key growth regions"including Asia Pacific and the Middle East, while continuing to grow Europeanmarket share.That has not always been easy. SR Technics' Dublin operation was dealt a blowearlier last month when Aer Lingus said it willpull out all but its linemaintenance worklater this year. The Irish flag carrier makes up about 40% ofDublin's business and only about half that is expected to remain. As well as itsstandard line maintenance bays, the facility - which began life as Aer Lingus'sin-house maintenance facility - specialises in auxillary power units and landing

gear overhaul. SR Technics has yet to say how the decision will affect the1,300-strong workforce, although media reports have said around 200 jobscould be at risk.SR Technics' bosses may view Aer Lingus's move as a blip in an ongoinggrowth curve for a company which - like many Swiss companies - includes aversion of the famous white cross in its company logo, but sees itself very muchas a global player that happens to have its headquarters in Zurich.
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Karl Isler is Head of Operations Research and Strategy at the Revenue

Management

and Pricing department of Swiss International Air Lines. He developed the

concepts

for the integrated O&D pricing and inventory control strategy used by Swiss Air

Lines

since 2003. In this context he is author of several articles dealing with dynamic

pricing and airline revenue management

CARGO load factors and volumes are back to pre-crisis levels at SwissInternational Airlines, but revenues and yields are definitely not. In fact, thecarrier is not even half way to recovering from a dramatic fall in rates duringthe downturn.

Oliver Evans, head of cargo, says yields are now moving upwards, but says itwill take some time before they come back to levels seen in the first half of

2008. And while relatively optimistic he remains concerned, like manyeconomists globally, about the strength of the recovery of Europe, wherecompanies are still shedding jobs and governments bring to an end their fiscalstimulus packages.

Swiss at least has the advantage of having no freighters to fill. Being relativelyconstrained in its belly capacity, it has managed to return to 80-85 per cent loadfactors on its long-haul routes. And while Evans says Asia has driven thisrebound, he also says routes across the Swiss network are achieving these

levels.

The carriers focus on specialist products also helped it during the downturn.Evans says that these too suffered from yield erosion, but that volumesremained resilient, even growing slightly for pharmaceuticals on some routes.


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SWISS put a clear focus on enhancing its competitiveness throughout 2004. TheFoundation

for Winning cost reduction and revenue raising

programme initiated the previous year had delivered significant improvementsby mid-2004.

The actions taken were based on three strategic

pillars: concentrating flight operations on a sustainably profitable route network,substantially

reducing costs and launching the new SWISS in

Europe product.

The SWISS route network was resized. Available

seat kilometre (ASK) capacity at the end of

2004 was 17.9 % below its equivalent at the end

of the previous year. Further codeshare agreements were concluded with partner

airlines to

ensure that an extensive range of air services

could continue to be offered.

Clear progress was achieved on the cost front. A

substantial contribution was made here through

productivity increases among the companys

personnel. The total number of full-time equivalents (FTEs) on the Grouppayroll at the end

of 2004 was 1 447 or 17.9 % lower than at the

end of the previous year. Personnel expenses

saw a 19.2 % year-on-year decline. Further efficiency enhancements are stillrequired, however. SWISS also agreed more advantageous


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terms and conditions with most of its major suppliers. Renewed efforts shoulddeliver further

improvements here, too, especially in the aircraft maintenance field.

Some of the cost savings achieved were nullified

by the record levels to which fuel prices rose

in the course of the year. The average price of

Brent crude oil in 2004 was approximately 34 %

above its prior-year level, and as much as 68 %

above the average of the last ten years. Changes

in the price of Brent are a good indicator of

trends in the price of aviation kerosene, though

jet fuel may show stronger or weaker fluctuations. Indeed, average jet fuelprices rose even

faster than the price of Brent in 2004. The increases in kerosene prices addedCHF 120 million to SWISSs fuel costs for the year. Around

30 % of this was recouped through the fuel surcharges added to air ticket prices.

SWISS in Europe, the European product

launched in late summer 2003, established

itself in the market and made its own contribution to the companys turnaround

endeavours.

The goals set on the cost side were achieved.

But booking volumes have not developed in line

with expectations. With increasing pressure

from competitors and from the low-cost carriers in particular SWISSrecorded only a slight


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year-on-year increase in its load factors. The

company introduced a more user-friendly and

significantly faster online booking facility on

its www.swiss.com website in spring 2005

to help further increase sales via this direct

distribution channel.

To identify and exploit further improvement

potential, the Management Board created a

Continuous Improvement SWISS (CIS) project

team in summer 2004. The CIS team was subsequently active at asupradivisional level, devising

and launching various projects and also making a

key early contribution to preparations for the

actions designed to give SWISS a sustainably

competitive position which were communicated

in January 2005.

Yields under pressure, but a positive RASK

Despite the economic recovery in Europe, yields

revenue per passenger-kilometre are still under

pressure throughout the European air transport

sector. The market is still suffering from persistent overcapacity and a steadyerosion of fares.

The growing ranks of low-cost carriers active in

the market have further intensified competition.


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was also located and tapped by adopting a more

sophisticated pricing and revenue management

model.

Substantial progress towards

a competitive company

An improved cost structure

SWISS substantially reduced its costs in the

course of 2004 to give itself a more competitive

cost base within the international air transport

industry. The first benefits of the restructuring

measures implemented were actually reflected in

results at the end of 2003. But the full impact of

these actions was only felt in 2004.

Unit costs or costs per available seat-kilometre

(CASK) for the first six months of 2004 were 2.2 %

below their prior-year level. CASK for the second

half-year was 2.7 % above its 2003 equivalent,

but this is due largely to the impact of higher fuel

prices: if fuel costs are excluded, CASK for the

second six months was 3.2 % below the same

period of the previous year.

While the significant cost economies effected

have already delivered substantial improvements,


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endeavour. This not only increases customers

benefits; the lower resulting costs per available

seat also provide SWISS with greater scope to

compete with the low-cost carriers. SWISS also

aims to better exploit existing revenue potential.

Services in Geneva and Basel will be transformed

into cost-covering production systems. Routes

which SWISS does not operate itself under the

new approach will be transferred to partner airlines wherever possible, to ensurethat customers

continue to enjoy attractive flight schedules.

A partnership agreement has already been concluded with Air France for theGenevaParis route.

In the course of the 2005 summer schedules, and

by May 1 at the latest, the agreement will see the

ten daily flights operated by Air France published

as codeshare services, while SWISS ceases its

own operations on the route. The new arrangement will give SWISS customersa choice of ten

frequencies a day between the two cities instead

of the present six.

The network modifications planned will lead to

the reduction of the aircraft fleet by at least

13 regional aircraft. Which aircraft types will be

affected is currently the subject of ongoing


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negotiations with candidate partner airlines and

potential purchasers of the aircraft concerned.

Further cost economies are expected to be

achieved through negotiations on the companys

collective labour agreements. All SWISS employees cockpit, cabin, groundstaff and management personnel should be more productively deployed. Inaddition to increases in

efficiency and productivity, salary structures

should also be aligned more closely to the

competitive environment.

Substantial cost reductions should also be

achieved through further contractual negotiations with all the companyssuppliers. The costs

of the external maintenance of the mediumhaul and long-haul fleets, which are

still far too

high, are a cause of particular concern. Despite

efforts that have now been continuing for some

18 months, the cost reductions sought in this

area have still not been achieved. Swiss International Air Lines Ltd. and SRTechnics Switzerland

have referred their dispute over the interpretation

of the full support contract concerned to a court

of arbitration. The partners bilateral negotiations

are continuing parallel to these endeavours.

The outsourcing of IT operations to Swisscom IT


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Services which was due to be formally effected

on March 1, 2005 is well under way. The new arrangement enables SWISS tofocus even more

closely on its core business. It will also lower the

companys IT infrastructure costs, place formerly

fixed costs on a variable footing and smooth out

investment peaks.

SWISS further announced a reorganisation of its

call centres for the Swiss market in mid-February.

The new arrangement entails closer collaboration

with Mindpearl, the companys fully-owned subsidiary which specialises intelephone sales. As a

result, three of the four SWISS call centres in

Switzerland will cease operations. The SWISS call

centre in Basel will be expanded by at least ten

positions. Customers will continue to receive the

usual high-quality service. Mindpearl already

successfully provides telephone call centre services for almost all SWISSmarkets around the

world.

The current surplus of personnel in some parts

of the company, the planned downsizing of the

aircraft fleet and the endeavours to increase

productivity companywide will lead to the elimination of 800 to 1 000 positions

from the SWISS


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workforce. The company is working with its

unions to seek solutions that are as socially acceptable as possible for thepersonnel affected.

The reductions will be effected over an extended

period, but will be completed by mid-2006.

Around one-third of the reductions are expected

to be achieved through natural employee turnover.

All in all, SWISS is seeking to lower its net annual

costs by approximately CHF 300 million. This

recurring improvement should be achieved in full

from 2007 onwards

Management structure and personnel

numbers

A more efficient and market-oriented management structure was adopted onSeptember 1,

2004. Four function-based organisation units

Sales & Marketing, Network, Finance and Operations are now represented onthe Management

Board, the highest management level.

The former Marketing & Services division was

divided into the divisions of Sales (now Sales &

Marketing) and Operations. A further change saw


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the creation of a new position of Executive VicePresident Corporate Strategy,who is responsible

for ensuring the strategic further development of

the companys various business units in line with

a coherent overall strategy.

The number of employees in the Group in fulltime equivalent terms had beenreduced to 6 625

by the end of 2004, meaning that 1 447 positions

had been eliminated in the course of the year. The

downsizing affected 1 725 employees.

With further productivity improvements still

needed, major changes will also be seen in 2005

in personnel terms. These will centre partly on the

Collective Labour Agreements, which are currently being renegotiated. Butstaff numbers will

also be involved. The latest restructuring measures announced in mid-January2005 will result

in the elimination of a further 800 to 1 000 positions by mid-2006.

Finance: a focus on liquidity

Stabilising SWISSs liquidity was a priority objective in 2004. With substantialimprovements

on both the cost and the revenue front, operating

cash flow for 2004 was a CHF 529 million improvement on the previous year.SWISS posted a

positive cash flow from operating activities of

CHF 189 million, which compares to a negative


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cash flow of CHF 340 million for 2003. Active

cash management was also instrumental in

stemming the drain on liquid funds.

To further strengthen its liquidity base, SWISS

closed a credit agreement with an international

banking syndicate for a CHF 325 million secured

credit facility at the end of October 2004. The

credit amount available to SWISS as liquidity

under this agreement will gradually increase between 2004 and 2006, subject tothe fulfilment

of obligations arising from certain aircraft lease

agreements. The credit agreement was concluded for a three-year period. InDecember,

SWISS also announced the conclusion of a

three-year CHF 15 million loan agreement with

Unique (Flughafen Zrich AG).

In order to reduce its exposure to foreign exchange, interest rate and oil pricefluctuation

risks, SWISS makes use of hedging instruments

which are common practice in the airline industry.

In view of its liquidity situation, however, SWISS

refrained from hedging its fuel needs for large

parts of 2004. The record high prices of jet fuel

created a generally extremely difficult market

environment in the course of the year.


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Having closed its secured credit facility in the

fourth quarter of 2004 and seen fuel prices fall

somewhat from their record high levels, SWISSs

in-house risk management specialists began to

build up new hedge positions to protect the company from price fluctuations,especially in the

critical winter months. By December 31, 2004,

the company had hedged approximately 27 % of

its fuel needs for the following 12 months

Sales and distribution

Overcapacity, the rise of low-cost carriers and the

growing importance of the Internet as a distribution channel are all changing thecompetitive

landscape and are forcing the airlines to seek

cost economies in their distribution activities, too.

SWISS introduced a new distribution model on

January 1, 2005. The new model ensures greater

cost transparency, by making a clear distinction

between the services provided by the airline and


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those provided by the travel agency.

The new distribution model abolishes the commissions which SWISSpreviously paid travel

agencies on the sale of its tickets. The travel

agencies now debit the customer directly for the

services they provide. In adopting the new system, SWISS is following a globalairline industry

trend. The Swiss Federation of Travel Agencies

was also involved in devising the new model, to

optimise its introduction and acceptance within

the travel sector.

SWISS intends to make even greater use of the

Internet and substantially increase online sales

via its www.swiss.com website. The company

expects this to generate additional revenue and

reduce distribution costs. So, in the past few

months, SWISS has invested in modernising its

booking engine. The new facility, which was introduced in spring 2005, issignificantly more powerful and user-friendly. With its state-of-the-art

technology, SWISSs www.swiss.com website

offers customers a convenient and reliable online

facility for booking their flights according to their

individual wishes and needs.

Bilateral partnerships expanded

After protracted negotiations, SWISS decided in


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summer 2004 not to proceed with its original plan

to amalgamate its Swiss TravelClub frequent

flyer programme into the British Airways (BA)

Executive Club programme. The decision, which

was taken for strategic reasons, also meant

that the bilateral agreement between SWISS and

BA could not enter into effect and, as a result,

SWISS would not be joining the oneworld alliance.

This did not affect SWISSs bilateral commercial

(codeshare) agreements with the other oneworld

alliance members, which remain in effect.

SWISS serves 74 destinations around the world in

its 2005 summer schedules. The European network extends to 47 destinations in22 countries,

while the intercontinental network comprises

27 points in 19 countries. A total of 69 destinations are served from Zurich: 42in Europe and

27 overseas. From Geneva, SWISS serves eight

points in Europe along with New York JFK. And

Basel enjoys service to 18 European destinations.

These services, which are operated by SWISSs

own aircraft, form the backbone of the route network. On top of this, SWISSalso serves numerous

destinations under codeshare agreements with


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various partner airlines. Together with its partners, SWISS thus offers itscustomers an extensive network of services with connections to all six

continents, along with all the benefits of its attractive Swiss TravelClub frequent

flyer programme.

The successful partnership between SWISS and

American Airlines was further developed in the

course of 2004. Service between Zurich and New

York was enhanced from the start of the 2004/05

winter schedules on October 31 by carefully coordinating the partnersdepartures and arrivals.

As a result, departure times from Zurich are now

more clearly staggered. Flights now leave for New

York at 10:00 (to JFK), 13:00 (to JFK) and 16:55

(to Newark).

SWISS also concluded codeshare agreements

with various partner carriers in 2004. In addition

to dozens of destinations that can be reached via

the home airports of SWISSs airline partners,

customers also benefit from the numerous direct

services which SWISS can offer under these

codeshare agreements. The 2005 summer

schedules offer direct codeshare services to 29

destinations from Zurich, Geneva and Basel, 23 of

them in Europe and six overseas. Twelve of these

destinations with direct codeshare service are


25/40

additions to the SWISS route network; the others

are also served by flights operated by SWISS,

with the codeshare agreements offering SWISS

customers the benefit of a more frequent service

pattern.

Cargo

Swiss WorldCargo, the cargo business unit

of Swiss International Air Lines Ltd., sells the airfreight capacity of the 78aircraft which SWISS

uses to operate its scheduled services. In addition

to this, Swiss WorldCargo markets the capacity

of an Airbus A300 dedicated freighter and cargo

capacity on the flights of various partner airlines.

In the 2005 summer timetable schedules,

Swiss WorldCargo offers airfreight services from

Switzerland to 71 destinations around the world.

Swiss WorldCargo carried 208 165 tonnes of

cargo in 2004, generating 1.14 billion tonnekilometres. The intercontinental

cargo load

factor (by volume) of 86.3 % was a 1.9-percentage-point improvement on theprevious year.

In a fiercely-contested market, Swiss WorldCargo

also maintained its yield, or revenue per tonne

of cargo carried.

Special products and services are growing


26/40

steadily in importance in the air cargo sector.

Swiss WorldCargo serves these niche markets

with a range of products that offer the customer

sizeable additional benefits. The proportion of

its revenues generated by special products

increased to 23.6 % in 2004, a year-on-year improvement of two percentagepoints.

Charter and special tours

SWISS also operates its own charter and special

tours business. Two advanced Airbus A320 aircraft are deployed on charterservices, largely for

major tour operators. But the SWISS charter unit

also markets surplus capacity from the scheduled

aircraft fleet, helping raise its productivity.

Charter services: SWISS organises various

charter flights on behalf of its customers: flights

to tourist destinations, special flights for the

Swiss government, VIP flights and flights to

special events (such as trade fairs). Any SWISS

aircraft can basically be chartered, from an

Embraer RJ 145 to an Airbus A330 or A340 with

up to 230 seats.

SWISS also offers its Rent-a-plane service for

one-off charter requests. This product is aimed


27/40

primarily at corporations and private individuals:

a major company excursion, for example, or a

special birthday treat.

Special tours: SWISS further acts as a tour

operator, organising its own programme of special trips and tours such as citybreaks, themed

arts and music trips and study tours and visits

that are specifically tailored to a customers

individual needs.

Flight operations and technical services

Flight operations: The reliability of the companys flight operations remainedvery high in

2004. SWISS was able to perform 99.2 % of its

published flights, a further 0.4-percentagepoint improvement on the already-high reliability level of the previous year.

Punctuality was also improved, but remained

less than satisfactory. This is due primarily to

the less-than-ideal use of the capacity at

Zurich Airport owing to limits on the number of

aircraft movements during key departure and

arrival periods and the restrictions imposed by

Germany on approaches from the north. SWISS

is making various attempts to alleviate the situation in collaboration with ZurichAirport, Skyguide (Switzerlands air traffic services provider)

and the Swiss Federal Office for Civil Aviation.


28/40

With the downsizing of the cockpit crew corps

and the renewal of the aircraft fleet, SWISS

was faced with strong demand for conversion

training in 2004. The requirements posed quite

a challenge in volume terms; but, as expected,

it was successfully risen to by the companys

pilot training organisation.

A further change in the course of the year

saw cockpit and cabin crews, along with ground

services, subordinated directly to the Chief

Operations Officer. The Operations division is

thus responsible for all the companys operating

activities from airport to airport, both on the

ground and in the air.

Technical services: SWISS also posted an

encouraging performance in 2004 in terms of

the maintenance of its regional aircraft fleet.

Fleet reliability was further increased to an impressive 98.9 %, a rise of 0.3percentage points.

The year also saw a reduction in flight cancellations for technical reasons: thesedeclined to

0.2 %, a 33 % improvement on the previous year,

and a full 60 % improvement on 2002.

Personnel numbers were reduced by more than


29/40

20 % in the regional fleet maintenance sector.

The downsizing was partly due to the fleet resizing of autumn 2003, but wasalso achieved

through increases in efficiency. Technical Services conducted an extensive costreduction

programme in 2004 which delivered recurrent

savings of millions of francs. Efforts here included

the successful renegotiation of various contracts

with key suppliers.

Swiss International Air Lines Ltd. and SR Technics

Switzerland have now referred their dispute over

the interpretation of the currently-valid

Full Support Contract to a court of arbitration.

They continue to conduct their own bilateral

negotiations parallel to this.

For commercial reasons, the C Checks (major

maintenance inspections conducted every five

years) on two Airbus A320s were successfully

performed at Shannon Aerospace in Ireland.

SWISS is currently in talks with various maintenance providers with a view toissuing further

commissions to these suppliers for work not covered by the long-term SRTechnics agreement.

SWISS Technical Services in Basel obtained

its certification to perform Airbus A320 work


30/40

at the end of 2004. As a result, it was able to

embark on a cabin refurbishment programme

for eleven of the companys Airbus A320

aircraft in January 2005.

SWISS reported a seat load factor of 74.9 %

for 2004 as a whole, a 2.5-percentage-point improvement on the previous year.Total annual

capacity amounted to around 27.5 billion available seat kilometres (ASK), a17.9 % reduction

from its 2003 level. Total traffic volume showed a

more modest 15.0 % decline to around 20.6

billion revenue passenger kilometres (RPK). The

modifications to the route network effected

under the corporate restructuring of 2003 and

2004 thus had a positive overall impact on

SWISSs load factors. The company carried some

9.2 million passengers in 2004 to destinations all

over the world.

Seat load factor on intercontinental services

totalled 81.3 %, a substantial 3.3-percentagepoint increase on its prior-yearlevel. ASK capacity

was reduced 18.1 % year-on-year, while RPK

traffic declined by only 14.7 %. SWISSs intercontinental services recorded

improved load factors


31/40

year-on-year for every month between March and

December 2004.

Seat load factor for SWISSs European network

amounted to 60.8 %, an improvement of 1.2 percentage points on the previousyear. While ASK

capacity was 17.4 % below prior-year levels, RPK

traffic saw a 15.7 % decline. The persistently

strong competitive pressure within Europe, particularly from the continents

low-cost carriers,

depressed load factors on the European network,

especially in the latter half of the year. The pressure exerted by the low-costcarriers on both the

capacity and the pricing fronts is being clearly

felt, particularly in the continents larger prime

markets.

SWISSs cargo business continued its positive

performance trend. Swiss WorldCargo transported a total of 208 165 tonnes offreight in 2004,

generating a total traffic volume of 1.14 billion

cargo tonne kilometres. Intercontinental cargo

load factor (by volume) stood at 86.3 %, 1.9 percentage points above its prior-year level.

Corporate governance


32/40

SWISS is committed to the principles of todays

corporate governance, and strives to ensure optimum transparency in all itsbusiness decisions,

policies and activities towards all its stakeholders,

and in particular towards current and future

investors in the company.

The details provided below are in compliance

with, and in some cases exceed, the requirements

of the Directive on Information Relating to Corporate Governance issued by theSWX Swiss

Exchange. Unless otherwise specified, all these

details reflect the companys corporate governance arrangements on the balancesheet date of

December 31, 2004. Significant developments

since this date are stated at the end of this corporate governance section.

1. Group structure and shareholders

1.1 Group structure

1.1.1 Operational group structure

The business of the Swiss International Air Lines

Group is conducted to an overwhelming extent

by Swiss International Air Lines Ltd. Of the other

group member companies, only Europe Continental Airways S.A. is active inthe flight operations field. The remaining group member companies primarily

provide services in the sales and

training sectors. Further segment reporting


33/40

details are presented on Pages 75 and 82 of the

Financial Report.

1.1.2 Listed companies within the scope

of consolidation

Swiss International Air Lines Ltd., which has its

registered office in Basel, is the only group member company whose shares arelisted on the SWX

Swiss Exchange in Zurich. The companys tradeable registered shares are listed

under securities

number 1326969. The large majority of the companys share capital (86 %) is,however, subject

to a lockup agreement preventing its sale until

August 31, 2005. These shares are listed under a

separate securities number, 1533324 (but see

also 10 below, Major subsequent developments

between the balance sheet date and March 30,

2005). The stockmarket capitalisation of Swiss

International Air Lines Ltd. on the balance sheet

date amounted to CHF 464 026 269.

1.1.3 Non-listed companies within

the scope of consolidation

A list of the companies within the scope of

consolidation which are not listed on any stock

exchange will be found on Page 118 of the

Financial Report.


34/40

1.2 Significant shareholders

A list of the companys major shareholders on

December 31, 2004 is provided on Page 112 of

the Financial Report (but see also 10 below,

Major subsequent developments between the

balance sheet date and March 30, 2005).

1.3 Cross-shareholdings

The company has no cross-shareholding

arrangements.

2. Capital structure

2.1 Capital

Details of the companys ordinary, authorised

and conditional share capital are provided on

Pages 112 of the Financial Report.

2.2 Authorised and conditional capital

in particular

Precise details of the companys authorised

and conditional share capital are provided on

Pages 112 of the Financial Report.

2.3 Changes of capital

Details of the changes to share capital in recent

business years are provided on Page 112 of

the 2004 Financial Report, Page 129 of the


35/40


36/40

service in business class to cater to Crossair's high percentage (80 percent) ofbusiness travelers.Crossair practiced a policy of cooperating with large airlines, particularlySwissair, rather than competing directly, reported Air Transport World. An

agreement with the Swiss flag carrier limited Crossair to aircraft of 50 seats,while Swissair agreed not to fly planes with less than 100 seats. Under a Swisslaw dating back to 1948, Swissair had first pick of routes. Crossair was alsolisted on Swissair's computer reservation system and operated some routes for

both Swissair and Lufthansa.Crossair's original equipment consisted of Fairchild Metro regional airliners. InOctober 1980, Crossair placed an order for ten Saab-Fairchild SF-340s,

becoming the launch customer for the 35-seat commuter airliner. Technicalproblems with the SF-340 plagued the type following its somewhat delayed

introduction in September 1984. The first three planes were soon taken out ofservice due to problems with the General Electric CT7 engine. Crossair leasedold Fokker F27s, Caravelles, and McDonnell Douglas MD-81s to fill out itsfleet. These problems were worked out eventually, and Crossair became anenthusiastic Saab owner. In the mid-1980s, Crossair, seeking to diversify,

became the world's first certified CT7 engine service center.Turnover was CHF 82 million in 1985, up a third from the previous year,

producing profit of CHF 3.1 million, up about 25 percent. Passenger trafficaccounted for 82 percent of income, with charter flying accounting for most ofthe remainder. The route network then stretched beyond Switzerland to Austria,

France, Luxembourg, Italy, West Germany, Belgium, Holland, and Albania.The company had 320 employees, including 105 pilots.

Net profits were CHF 9.8 million ($7.5 million) in 1989. In 1988, Swissair hadtaken a 38 percent stake in Crossair, which became the group's only low-costcomponent. The new ownership produced some changes in Crossair's fleet.While still devoted to the Saab 340, the company ordered a few Fokker 50turboprops to cover a shortage of capacity. In May 1990, the airline stepped upto the 83-seat British Aerospace BAe 146 jet, which the carrier dubbed"Jumbolino," for use on trunk routes.

Passenger count topped one million in 1990. The airline connected 31 points inten countries. Crossair was considered among the top European regionalairlines, known for its responsive and creative management (who had anaverage age of just 36). However, after a decade of profit growth, the carrier

posted a CHF 2.9 million loss in 1990. During the year, Crossair built a newhanger/office building that included a Chez Moritz staff restaurant featuring aglass-bottom floor with a view of the hangar below.Dealing with Deregulation in the 1990s

Crossair met the challenge of European deregulation with expansion. This was

sometimes complicated by the fact that Switzerland was not a member of theEuropean Community (EC), and nearly all of Crossair's international


37/40

destinations were EC cities. Service between Lugano and Florence wascancelled by Italian authorities due to Crossair's competition with airlines there.Crossair also suffered when Switzerland's ban on 40-ton tractor-trailers miffedEC transport officials, who saw it as a protectionist policy.

The carrier was quick to capitalize upon opportunities in Eastern Europe, takinga third share Bratislava-based Tatra Air in collaboration with Slov-Air ofCzechoslovakia. Crossair also owned shares in Delta Air and Alsavia, registeredin France and Germany, respectively. It took a 15 percent share of Scotland'sBusiness Air in 1990.Limited access to the Italian market, competition, higher financing fees, andincreased airport fees conspired to produce Crossair's second annual loss in arow in 1991. Suter soon launched a cost-cutting program, and the company'sone-third share in unprofitable Tatra Air was sold in July 1992.

By this time, Swissair had increased its share in Crossair to 51.9 percent. In1993, Swissair joined KLM, SAS, and Austrian Airlines in the pan-European"Alcazar" alliance to compete against larger rivals British Airways, Air France,and Lufthansa. However, after less than a year of negotiations, the grouping fellapart over the choice of a U.S. partner.Swissair then set out to expand by acquiring holdings in EC airlines, such asSabena. In 1995, Swissair paid CHF 267 million for a 49.5 percent holding (EClaw limited it to a minority interest) in the notoriously unprofitable Belgiancarrier. The next year, after failing to win reductions in labor costs, Swissairwrote off its equity in the company as it posted a CHF 497 million loss.

However, in 1998, when Swissair posted a CHF 361 million profit, the strategyseemed to be working.In 1995, Swissair closed its unprofitable Balair/CTA charter unit, transferringresponsibility for its short-haul flights to Crossair, which also received its eightMD-80 airliners. The parent company decided that Crossair would handle allflights involving aircraft of 100 seats or less; Crossair soon ordered a dozenAvro regional jets for CHF 350 million. At the same time, Swissair wasincreasing its holdings in Crossair from 60 percent to 67 percent.These changes--dubbed "Project ZGB"--also increased Crossair's workforce

from 1,500 to 2,000 as its annual revenues nearly doubled in two years fromCHF 430 million ($375 million) in 1994. Profits continued to rise even as thesechanges were taking place.In early 1996, a unique cross-branding experiment with the Hotelplan travelagency and McDonald's restaurants had the hamburger giant catering a specially

painted "McPlane" on package tour operations. Crossair set up a French airline,Europe Continental Airways (ECA), in 1997, taking a 35 percent holding in thecompany (French travel agency owner Foch Finances Investissement held theremainder). Based near Crossair at the EuroAirport Basel-Mulhouse-Freiburg,

the new company was registered in France, allowing for the benefits ofmembership in the European Union, which was liberalizing the air traffic


38/40

markets of member countries. ECA was renamed EuroCross by the time itstarted flight operations in late March 1998.Crossair posted record profits of CHF 63.5 million in 1998 as operatingrevenues passed CHF 1 billion ($1.46 billion). It had 2,800 employees at the

end of the year. However, while Crossair was thriving, Swissair, saddled withseveral loss-making subsidiaries outside Switzerland, was on a course for

bankruptcy. Besides Sabena, it had acquired 49 percent stakes in Germancharter carrier LTU International Airways and three French regional airlines:Air Littoral, AOM French Airlines, and Air Libert. It also acquired smallerstakes in LOT Polish Airlines, South African Airways, and Italy's VolateAirlines and Air Europe. Swissair posted a colossal CHF 2.89 billion loss in2000. In March 2001, the board brought in Nestl veteran Mario Corti as CEO.

Nevertheless, the debts continued to mount.

A New Flag Carrier in 2001In September 2001, Swissair sold its 70.35 percent stake in Crossair to a groupof investors led by Credit Suisse and UBS (Union de Banques Suisses) foraround CHF 1.5 billion ($850 million), which accounted for a little more thanhalf of the total new capital raised from government, banks, and industry.The September 11 attacks on the World Trade Center in New York Citydepressed the airline business worldwide and multiplied insurance premiums.This situation was aggravated for Crossair when one of its Avro regional jetscrashed in late November 2001, killing 24 people.Swissair's planes were grounded in October 2001, stranding 18,000 passengers

worldwide, until emergency financing--CHF 450 million from the Swissgovernment--could be arranged to keep the airline flying for the rest of themonth. Some of Swissair's routes were already being assigned to Crossair.Project Phoenix, approved on October 22, outlined the financial structure of thenew Swiss flag carrier. The federal government provided another CHF 1 billionto keep Swissair going through March. It also bought a 19.2 percent stake inCrossair for CHF 600 million. UBS and Credit Suisse together invested CHF350 million for a 19.5 percent stake. Regional governments and businessinterests invested another CHF 2.1 billion.

Two-thirds of Swissair's routes, including 36 international destinations, weretransferred to Crossair. Under the Phoenix Business Plan, Crossair was to add52 planes to its fleet of 75 in the next two years. Utilizing its lower coststructure, Crossair was hoping to break even in 2003 with revenues of CHF 5

billion ($3 billion). The company now had about 10,000 employees, versus the5,500 it employed before taking over Swissair's operations.Crossair was restructured as Swissair's successor, but company founder MoritzSuter was not able to oversee the transition. He and the entire Crossair boardresigned at an emotional, six-hour board meeting on December 6, 2001. The

bankers and bureaucrats appointed former KLM chief Pieter Bouw chairman inSuter's place, while Andr Dose was named CEO. Crossair itself posted a loss


39/40

of CHF 314 million ($188 million) on revenues of CHF 1.39 billion ($834million) in 2001, mostly due to restructuring charges.Sabena Belgian World Airlines, 49 percent owned by Swissair, itself collapsedin the wake of Swissair's bankruptcy. Lawsuits ensued over alleged broken aid

agreements on behalf of Air Libert and TAP Air Portugal. As Air TransportWorldreported, the transition was complex and contentious. None of theshareholders, creditors, employees, or government officials could be 100

percent satisfied after such a collapse, but Switzerland still had anintercontinental airline. One of the biggest challenges would certainly becultural, mixing the staff at entrepreneurial Crossair with their moreconservative Swissair counterparts, mostly based in the banking center ofZurich.Crossair began using the SWISS brand name in April 2002. Swiss International

Air Lines Ltd. became the company's official new name effective July 1, 2002.SWISS was updating its fleet with 13 Airbus 340 aircraft due for delivery in2003 and was aiming to join the United States-led Oneworld global airlinealliance.

Swissport International with revenue increase of 5.2 pc in 2010

18/03/2011

Swissport International, the worlds number-one provider of ground services tothe aviation industry, generated total operating revenue last year of CHF 1.741

billion, a 5.2% increase over 2009 despite the negative impact of theXunderperforming operations in 2009. On a like for like basis the increasewould have been a double digit one. This revenue increase further underpinsSwissports leading role within the ground and cargo handling services sector.

The Swissport Group expects to experience continued growth in the currentyear, supported by its new owner PAI Partners.

Swissport continues to enjoy business success, and reports a further increase inits operating revenue for the challenging year of 2010.All the Swissport Groups business units and geographical regions contributedto this improvement, a clear confirmation of the industry leaders successful

positioning and of how well its competitive and innovative services continue tobe received by its customer airlines. After a difficult and challenging 2009, the

turnaround in 2010 was particularly encouraging in the cargo handling sector,


40/40

but all the Swissport Groups operations achieved substantial productivity andquality enhancements.

Introduction

History

Bod

Management structure and personnel numbers

Present scenario

Finance: a focus on liquidity

Sales and distribution

Flight operations and technical services

Corporate governance

Product

Customer base

Future vision

Swissport International with revenue increase of 5.2 pc in 2010

18/03/2011

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