SWISS Board decisions concerning top Management and capital reduction

25 March 2003

With the appointment of Ulrik Svensson as Managing Director Finance responsible for Finances and Corporate Services and Manfred Brennwald as Managing Director Operation responsible for Engineering and Flight Operations, the new management level at SWISS is now complete. The appointments were made in the context of the previously announced introduction of a new management level in the Top Management structure.

The SWISS Board of Directors appointed two new Managing Directors at its meeting on 24 March.

Managing Director Finance
Ulrik Svensson (42), our newly appointed as Managing Director Finance responsible for Finances and Corporate Services, will head up both Finances and Corporate Services from 12 May 2003.Svensson has a proven track record as a turnaround manager. As CFO of the international Esselte Group based in London (6000 employees, balance sheet total Euro 1.3 billion), he helped the company out of a difficult financial situation. Esselte’s profit turnaround and debth reduction made the company fit to be acquired by an american private equity firm. He has accumulated an impressive stock of in-depth know-how in his 18 years as a Chief Financial Officer with various international companies. Having started out in the telecommunications industry, Svensson knows the “high volume, low margin” problem well and is also very familiar with a turnaround company situation. Ulrik Svensson is highly regarded in international banking circles. His most recent post was in London. A Swedish citizen, Ulrik Svensson obtained a degree in Business Administration from the School of Economics in Stockholm. He is married with three children.
Managing Director Operation
Manfred Brennwald (50) will replace Karel Ledeboer, the Chief Operating Officer (COO) to date, with effect from 1 April 2003. Karel Ledeboer joined SWISS in August 2002 as Head of Engineering and Flight Operations; he exercised this function on an interim basis as planned from the outset, and lent his active support to the search for a permanent Managing Director Operation.

A qualified engineer, Manfred Brennwald (Dipl. Ing. HTL) has already spent 25 years in the airline industry: he worked for the former Swissair as a flight captain and as President and CEO of the Swissair Training Center AG. He was promoted to the post of Executive Vice President Swissair Operations in May 2001. He has worked as Deputy to the Head of Flight Operations and as a flight captain since SWISS took off in the spring of 2002. He is a Swiss citizen, is married and has one daughter.

Top Management complete
The Board of Directors and the SWISS Management are delighted to have successfully concluded the reorganisation of the management structure with the appointment of Ulrik Svensson and Manfred Brennwald. Our Managing Director Commerce, William L. Meaney started work back on 1 January 2003. He heads up Strategy & Network, Product & Services, Sales & Marketing and Cargo. The three Managing Directors will form the future executive management under the leadership of CEO André Dosé. As a staff function, Human Resources will report directly to CEO André Dosé.
Reduction in capital
The Shareholders’ Meeting on 6 May 2003 will be called on to vote on a possible cut in capital. Given that the company cannot operate profitably in the current environment, net equity may end up falling below half the level of the share capital, in which case the Swiss Code of Obligations requires action to be taken (Art. 725, para. 1, OR). The Board of Directors wishes to prevent net equity from falling below 50% and will therefore propose that the par value of the shares be reduced from 50 to 32 francs at the forthcoming ordinary Shareholders’ Meeting. This pre-emptive measure may be enough to obviate the need to convene an extraordinary Shareholders’ Meeting. It will also reduce the discrepancy between the nominal value and the market value of SWISS shares and bring tax benefits for the company.
Contract for new A340 with SR Technics
SWISS intends to outsource maintenance work on the new Airbus A340-300 jets, which will join the fleet in June, to SR Technics. This contract will supplement the existing maintenance contract between SWISS and SR Technics for the Airbus A320s and A330s. The contract will run for six years. Valuable synergies will be captured by having all SWISS Airbus aircraft serviced by SR Technics.
SR Technics looks after SWISS aircraft under a "Total Maintenance Contract". This means it is responsible for all the technical work on the cells, components and engines of the above jets.SWISS modifies aircraft orders
SWISS is responding to the continuing crisis in the air transport industry by modifying its current fleet renewal programme. Adjustments are being made to both the number of EMBRAER aircraft ordered and the timetable for their delivery. At the same time, however, SWISS has expressly confirmed its commitment to its chosen fleet concept and its partner EMBRAER; and the aircraft ordered remain a cornerstone of the company’s future business strategy.