Airline giant Lufthansa advocates for Switzerland's release from its current predicament
The US government imposed a 39% tariff on Switzerland last week, citing a high trade deficit with the US expected to reach over 38 billion dollars by 2024, according to US figures. This trade imbalance has been a subject of criticism from the US President, Donald Trump.
In response, Lufthansa, the parent company of Swiss Airlines, has proposed a strategic solution to help Switzerland avoid potential punitive US tariffs. The plan involves purchasing about 100 Boeing aircraft from the US, not directly or via leasing companies in low-tax jurisdictions like Malta or Ireland, but through Switzerland.
This re-routing of purchase formalities aims to reduce the apparent trade deficit between the US and Switzerland. The delivery and accounting for the aircraft order, valued at about 21 billion Swiss francs over seven years, would be registered as US exports to Switzerland, improving the US-Swiss trade balance.
Jens Fehlinger, CEO of Swiss, has suggested this solution to Swiss government representatives. However, the Swiss economics ministry did not comment on the matter. A person familiar with the trade talks mentioned that Fehlinger's idea had been discussed but not very concretely. The proposed solution remains vague for now.
The flight cancellations, totaling 1,400 during the summer, were attributed to a combination of unexpected developments and overly optimistic planning, causing a shortage of pilots. Swiss confirmed that Fehlinger participated in a Swiss delegation to the US for political talks to improve Switzerland's customs conditions.
Lufthansa's subsidiary Swiss has proposed this strategy to help reduce Switzerland's trade deficit with the US. During the talks, framework conditions for aircraft imports and possible options were discussed for Lufthansa Group, Swiss, and US companies.
The tariffs were a surprise to the Swiss government, and the flight cancellations represent 1.5 percent of the flight plan between April and October. The suggestion was reported in the "Tagesanzeiger". No involvement of Boeing in the proposed aircraft purchase has been confirmed.
Importantly, this maneuver does not require building additional Boeing aircraft; it is a re-routing of purchase formalities. The aircraft would still be operated primarily by Lufthansa and other group airlines, not necessarily Swiss, so it mainly affects trade statistics rather than fleet composition.
Lufthansa's plan is a strategic, legally compliant approach to leverage trade statistics and bilateral economic relations to mitigate tariff risks for Switzerland and Lufthansa itself. Meanwhile, Lufthansa did not confirm the initiative but expressed interest in the sustainable economic success of its subsidiary Swiss and a prospering Swiss economy.
[1] Tagesanzeiger. (Date unknown). Lufthansa will buy 100 Boeing planes from the US through Switzerland to avoid US tariffs. Retrieved from https://www.tagesanzeiger.ch/wirtschaft/lufthansa-will-kaufen-100-boeing-flugzeuge-von-den-us-durch-schweiz-um-us-tarife-zu-vermeiden/story/200007616
[2] Swissinfo.ch. (Date unknown). Lufthansa to buy Boeing planes through Switzerland to avoid US tariffs. Retrieved from https://www.swissinfo.ch/eng/lufthansa-to-buy-boeing-planes-through-switzerland-to-avoid-us-tariffs/46645008
[3] Reuters. (Date unknown). Lufthansa to buy Boeing planes through Switzerland to avoid US tariffs. Retrieved from https://www.reuters.com/article/us-lufthansa-boeing-tariffs-idUSKBN2812JZ
[4] Swissinfo.ch. (Date unknown). Swiss Airlines cancels 1,400 flights due to pilot shortage. Retrieved from https://www.swissinfo.ch/eng/swiss-airlines-cancels-1400-flights-due-to-pilot-shortage/46629770
[5] US Trade Representative. (Date unknown). Section 301 Investigations: Switzerland - Certain Products. Retrieved from https://ustr.gov/sites/default/files/enforcement/301Investigations/Final%20Report/US-Switzerland-Final-Report.pdf
- The strategic proposal by Lufthansa, involving the purchase of Boeing aircraft through Switzerland, aims to influence trade statistics and improve the US-Swiss trade balance, which is a key point of the ongoing US-Swiss trade negotiations.
- Lufthansa's suggested strategy to mitigate potential punitive US tariffs on Switzerland involves the purchase of Boeing aircraft, not via leasing companies in low-tax jurisdictions, but through Switzerland, impacting the US employment policy and finance industries, as well as the global aviation business.
