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For several decades, Switzerland's former national airline, Swissair, has had a reputation as being an almost perfect embodiment of traditional Swiss virtues like technical innnovativeness combined with reliability and solidity at the same time. Already a glimpse at the white cross on red ground [Swiss Flag] on the tail of a Swissair aircraft was able to trigger patriotic feelings in many a Swiss traveling abroad." (Not my words, but a quotation you could read in almost any Swiss newspaper back in late 2001 after the grounding of Swissair.) For several decades, Switzerland's former national airline, Swissair, has had a reputation as being an almost perfect embodiment of traditional Swiss virtues like technical innnovativeness combined with reliability and solidity at the same time. |
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Already a glimpse at the white cross on red ground [Swiss Flag] on the tail of a Swissair aircraft was able to trigger patriotic feelings in many a Swiss traveling abroad." (Not my words, but a quotation you could read in almost any Swiss newspaper back in late 2001 after the grounding of Swissair.) When all Swissair aircraft were forced to stay on the ground on October, 2nd, 2001 due to the airline's inability to pay for kerosene, many Swiss politicians, business people and commentators saw this as a national shame. How could this have happened? |
![Swiss flag on Swissair aircraft tail [Swiss Museum of Transport]](swissair/swiss_flag_aircraft_HB-ICC_0857.jpg) Swiss flag on Swissair aircraft tail |
In the 1970's and 1980's the airline business undergoes major changes, first in the U.S.A., then in Europe as well. Tight market regulation is abandoned, prices erode under heavy competition and many an airline is ruined. The remaining airlines form alliances to increase their chances to survive.
In winter 1992/1993, four European airlines (Swissair, KLM [Dutch], SAS [Scandinavian], and AUA [Austrian]) plan a merger. The project is code-named Alcazar after the famous fortress in Spain. For some time, the negotiations can be kept secret, but by end of February, 1993, KLM officially admits that negoatiation are taking place. While the airlines' CEO's are about to agree on the new structures and the financial weight of each of the partners (Swissair, SAS und KLM 30% each, AUA 10%), first details trickle to the press rooms.
In all four countries, nationalist politicians begin to criticize the merger project. Switzerland's major easy-to-read newspaper, Blick, plays a particularly destructive role, publishing figures from a confidential financial assessment by JP Morgan stating that Swissair was worth about as much as the other three airlines together. The newspaper does not say, however, that the future chances of Swissair on the European market are rather desolate after Switzerland's decision not to join the common European market in late 1992. During one week, the newspaper publishes more details every day and quotes critical statements by industry and trade union leaders. Finally, Frank A. Meyer, editor in chief, sums it all up under the headline "Swissair must stay independent" and appeals to basic instincts stating that Swissair was "not just the nicest bride but rather the prey".
For a while, the four airlines continue to plan the merger, but by end of November, 1993 the project has definitely failed. Major managers leave Swissair in frustration and those staying have no visions.
Following the failure of the Alcazar project, SAS decides to sell its catering branch SAS Service Partner (SSP). Philippe Bruggisser, head of Swissair's associated companies, seizes the opportunity for growth. Wolfgang Werlé, an experienced catering manager coming from Germany's Lufthansa merges Swissair's Gate Gourmet and SSP. The success story helps Bruggisser to acquire a strong position in Swissair's management.
By May, 1995 the decisions have been made: Swissair acquires a 49% share of Sabena [Belgium] and tries to estabhlish an own alliance system. Major shareholders think that some management and board members are not the right people for the new strategy, however. Hannes Goetz, president of the board and Otto Loepfe, CEO, have to leave, not immeadiately, though. Philippe Bruggisser becomes COO in 1996 and Otto Loepfe resignes in 1997 due to health problems. He dies in 1998. Lukas Mühlemann, Bénédict Hentsch and Thomas Schmidheiny - two bankers and a entrepreneur - are the new strong figures in the board, while Eric Honegger, son of a former government member, is elected president of the board mostly for political reasons in 2000.
Within a few years, Philippe Bruggisser acquires several small foreign airlines. No doubt, he is very consequent in realizing the new strategy, but these airlines are not necessarily pearls. As long as the alliance with Delta Airlines - negociated by Otto Loepfe - is going on, nobody is alerted. But in June 1999 Delta leaves the Qualiflyer Alliance and concentrates on a single hub in Europe - Paris, not Zurich. Bruggisser does not want to become a junior partner to Air France and tries to go on in splendid isolation without Delta.
By this time, some insiders already see that Bruggisser has failed with his strategy, but the board still supports him. Instead of evaluating alternatives, Bruggisser continues to look for smaller airlines that he could acquire. When the board finally realizes, that Bruggisser has become part of Swissair's problems, it is too late. Mario Corti, successor to Eric Honegger as president of the board, loses too much time trying to find out how bad the situation really is. When Jacqalyn Fouse, head of finances, finally annouces that Swissair has a severe problem of illiquidity in autumn 2001, and air traffic is cut by about 30% following 9/11, Switzerland's major banks are not willing to give new credits to Swissair. This is the end for a legendary airline.
Within a few days, a new airline is being assembled from Crossair (the former Swissair daughter), leased Swissair aircraft and parts of Swissair's personnel. The new company's name - Swiss Air Lines - is not very creative, yet it takes some time to find it ... In 2005, Germany's Lufthansa takes over a majority of Swiss' stocks. This outcome could have been achieved eleven years earlier without the immense losses for Swissair shareholders and personnel ... Bankruptcy procedure for the old Swissair Group have still not come to an end (as of April, 2006).
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