Swiss in Oneworld looking closer?

Swiss International Air Lines and British Airways Plc confirmed Sunday that they are in cooperation talks, sparking hopes the beleaguered Swiss carrier could soon join the Oneworld airline alliance that is led by British Airways and AMR Corp’s American.

“We are in contact with British Airways,” Swiss press spokeswoman Elle Steinbrecher told Dow Jones Newswires, reiterating that Swiss is still interested to join Oneworld.

British Airways spokeswoman Joe Deveraux confirmed that the two airlines held talks last week, but declined to comment upon details of the discussion.

Industry observers said that Swiss needs to join an airline alliance as quickly as possible so it can attract more passengers and reduce marketing costs, as it tries to turn around. An early entry into Oneworld is also likely to push up its share price, which currently hovers at around CHF10, down around 80% from its peak of around CHF50, reached in 2002.

Unprofitable Swiss, which last year posted a net loss of nearly CHF1 billion, is on the lookout for a strong partner that would help ease the financial strain restructuring, which includes the grounding of more than 30 planes and 3,000 job cuts.

Earlier in the year, German Lufthansa AG was repeatedly reported to be interested in a merger or takeover of the Swiss airline, which was created out of collapsed Swissair last year.

While Lufthansa denied it made a takeover bid for Swiss, the two companies are still believed to be in talks about a looser form of cooperation.

However, Lufthansa is understood to be cooling to the idea of cooperation, given Swiss’ weak financial situation. With a daily cash drain of almost CHF3 million, Swiss is rapidly running out of cash despite a capital infusion of around $3 billion at the start of its existence last year.

However, the situation at Swiss improved this week, despite talk the company could ask for creditor protection as it has so far failed to receive a further CHF500 million from creditors to finance its revamp.

“We have reached a solution with our pilots and the ground handling unit and we have a deal with Swissport, the airports ground handling unit this week”, Steinbrecher said.

“The revamp is starting to take shape”, she said, adding that market speculation that the board of directors is considering creditor protection is unsubstantiated.
*********
Oneworld suits Swiss and with co-operation with many of the current members it was only a matter of time before the proposed entry into the alliance came around again. Just hope the news is true, stop the Lufthansa rumours.