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Last Updated: Sunday, 13 July, 2003, 08:46 GMT 09:46 UK
Lufthansa may buy ailing Swiss
Swiss aircraft
Despite a makeover, Swiss has struggled
Germany's Lufthansa is trying to take over Swiss International Air Lines, which is struggling to cut costs to survive, according to newspaper reports.

SonntagsZeitung said an offer - not confirmed by either airline - would guarantee Swiss' survival in a slimmed-down form.

The Swiss carrier, which was formed after the collapse of the much-larger Swissair at the beginning of last year, has admitted it is in merger talks with several competitors.

The airline was formed with the help of some 2.7bn Swiss francs (1.2bn; $2bn) in fresh financing, including some money from the state.

But despite aggressive marketing, it has failed to achieve its predicted growth, and operating conditions for all airlines have remained worse than many forecast.

Issues outstanding

Swiss said last week that it would cut its route network by more than one-quarter.

It previously announced plans to slash its fleet and staff by about one-third.

This action, if successful, is likely to make Swiss more attractive as a takeover target; several competitors, including Lufthansa, have previously said they want the airline to put its own finances in order before they will consider a tie-up.

Outstanding issues remain hammering out new contracts with restive unions, and securing a new credit line from its bankers.

If any merger is agreed, however, it may have trouble securing the agreement of European competition regulators.


SEE ALSO:
Lufthansa warns of air 'crisis'
14 May 03  |  Business
Lufthansa warns of deep loss
08 Apr 03  |  Business
War forces airline cutbacks
02 Apr 03  |  Business
PR flurry heralds Swissair relaunch
28 Mar 02  |  Business


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