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More cost cuts at Swiss under Lufthansa

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More cost cuts at Swiss under Lufthansa

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One day after announcing Lufthansa is to take over Swiss International Air Lines, the two companies’ bosses have vowed to continue cost-cutting measures designed to make the Swiss carrier profitable. They have no choice. Swiss has burned through hundreds of millions of euros since it was created three years ago.

Lufthansa’s CEO Wolfgang Mayrhuber said operating profits of the German flag carrier will stagnate this year owing to the buyout. But he added: “Our strategy will benefit from gaining a large hub in Switzerland. And customers will now have more choice of destinations and where they can change planes within one integrated airline. We’ll also access new markets with a a strong network of African destinations in addition to our routes.” Swiss serves 27 intercontinental destinations from its main hub in Zurich, including Cairo, Johannesburg and Tripoli. It has 6,625 workers, but recently said it needs to eliminate as many as 1,000 jobs by next year to become profitable. Lufthansa’s main hubs are at Frankfurt and Munich, which is less than an hour’s flight from Zurich. That worries union representative Urs Eicher who said: “We have no guarantees the Zurich hub won’t be cut back, whcih means I can’t give reassurances to my colleagues.” Lufthansa said the merger will generate one-off costs of 101 million euros, while it will generate expected annual savings due to synergies of 165 million euros from 2008.