Swiss repays CHF50mn of emergency loan despite heavy losses

Swiss (LX, Zurich) has already repaid CHF50 million francs (USD54.4 million) of a CHF1.5 billion (USD1.6 billion) government-guaranteed emergency loan granted last year to help it cope with the impact of COVID-19, says chief executive Dieter Vranckx.

“We have set ourselves the objective of not spending more than half of the loan granted by the (Swiss) Confederation, i.e. CHF750 million francs (USD817 million). So far, we have kept that promise. In June, we had the opportunity to repay CHF50 million,” he disclosed during an interview on Radio Télévision Suisse (RTS) on August 23. This was made possible through a small improvement in income in May and June, he said.

The respite, however, could be short-lived. With the slower winter months approaching, Vranckx feared the company would be forced to draw on the emergency loan again. “We saw it in June: when business is better, we can repay part of the loan. But winter will come. November and December are very difficult months for an airline. We will probably have to take back Confederation money”, he warned.

In 2019, before the pandemic, Swiss made a profit of CHF578 million (USD629 million). Its performance plummeted to a loss of CHF654 million (UDD712 million) in 2020 and nearly CHF398 million (USD433 million) in the first half of 2021.

The company responded with drastic cost-saving measures, including 550 lay-offs, 1,700 job cuts representing 20% of its workforce by the end of 2021, and a 15% fleet reduction.

The result was a smaller and leaner airline, said Vranckx. “We expect demand to drop by 20% in the medium term. We need to adapt our capacity, but it’s not just about getting smaller. We also have a transformation programme that aims to increase flexibility and to improve our ecological footprint,” he said. However, going green cost money, he acknowledged. “We must first make a profit before we can invest again in this area.” He did not foresee the airline returning to profitability before 2023.

Meanwhile, he said, Swiss was likely to resume services between Geneva and New York JFK either later this year or early next year, depending on the lifting of travel restrictions by the United States. “We are waiting for the right moment to restore it. The United States is still closed for travel from Europe. We are assessing the situation every week. There is no decision yet, but this flight is expected to resume in the fourth quarter of this year or the first quarter of next year.”