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Swiss cuts plane orders
ZURICH, Switzerland (Reuters) -- Swiss International Air Lines said on Tuesday it would reduce its capital and cut its order for new regional planes in half as it struggles to avoid the fate of its failed predecessor Swissair in the face of a global slump in travel demand. The flag carrier said it would cut its order for 60 Embraer aircraft in half and delay the delivery, originally planned to start in September, by one year. "There will be no new Embraers this year,'' a spokesman said, adding the first delivery would take place in 2004 and the second batch would follow in 2006. The move will save Swiss around 1.0 billion Swiss francs ($721.5 million), the spokesman said. Highlighting the speed at which the loss-making airline has burnt through its capital in the first year of its operation, Swiss proposed shareholders to approve a capital reduction at the annual meeting on May 6 to prevent net equity from falling below 50 percent. The par value of the shares is to be reduced to 32 francs from 50 francs, Swiss said. This step would "also reduce the discrepancy between the nominal value and the market value of Swiss shares and bring tax benefits for the company,'' Swiss said in a statement. Swiss shares closed on Monday at 3.50 francs, having fallen 83.3 percent so far this year and more than 50 percent last year. Swiss, built last year out of the remains of Swissair with a 2.7 billion franc injection from the government and a host of large Swiss companies, reiterated it would not break even this year. It added it was impossible to make a forecast for the current year due to the uncertain global situation. The airline said it expected demand for air travel to be ``modest at best'' this year as the difficult economic situation and geopolitical uncertainties marked by a war in Iraq continued to affect travel behaviour. The airline said revenues were likely to suffer further from lingering global overcapacity and fierce price competition. Earlier this month, Swiss posted a net loss of 980 million Swiss francs for its start-up year 2002. The operating loss totalled 909 million francs on revenues of 4.28 billion francs. Since last November, Swiss has slashed 1000 jobs and reduced its fleet by 20 aircraft. The spokesman said there were no further job or fleet cuts planned at the moment. Swiss also said in a statement it had appointed Ulrik Svensson as its new finance chief and Manfred Brennwald as its new chief operating officer. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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