official : Swissair filed for bankruptcy. Sabena next

[skysheriff]

i just heard 5 minutes ago on the radio that Swissair has filed for bankruptcy
By domino effect another major, Sabena will have to file for bankruptcy this week.
Affected companies also : citybird, virgin express ...

[The Guvnor]

Press release from SAir Group:

Application for a moratorium of debt enforcement for part of the SAirGroup - Crossair to take over large amount of Swissair operations

Zurich, October 1, 2001 - The SAirGroup has applied with the responsible court for a moratorium of debt enforcement for the SAirGroup, SAirLines and Flightlease companies. The SAirGroup will also sell its 70-per-cent stake in Crossair to UBS and the Credit Suisse Group. Crossair will assume responsibility for parts of Swissair's flight operations no later than the beginning of the winter schedules on October 28, 2001.

The events taking place in the USA on September 11 have had a strongly negative influence on the results of the SAirGroup as well as on the outlook for future results. At the same time, efforts to improve the Group's liquidity and equity basis by selling off non-strategic business activities and by refinancing the Group's aircraft fleets, were substantially hampered. The SAirGroup estimates that by the end of 2002 the negative influence on the cash flow and equity basis will amount to approximately CHF 3.1 to 3.8 billion.

This represents a thoroughly new situation for the company compared to the one faced at the end of August. The Group's Board of Directors is forced to take immediate and drastic measures. The Board has therefore decided to sell the Group's 70-per-cent stake in Crossair to UBS and Credit Suisse Group at current market price. The two banks will grant the SAirGroup an additional bridging credit of CHF 250 million that will allow the Group to finance activities in its airline-related business units up to a point where they may, possibly, be sold.

Crossair plans to take over individual segments, amounting in total to two-thirds, of Swissair's flight operations, thereby creating a competitive Swiss airline that would be active on a world-wide basis. This would take place no later than the beginning of the winter timetables on October 28.

The trimming of the route network and the fleet will also cause a capacity reduction at Swissair that will result in the loss of 2560 jobs, 1750 of those in Switzerland. Operations will be maintained at normal levels in all other Group companies.

A proposal for a moratorium of debt enforcement for SAirGroup, SAirLines and Flightlease will be made to the responsible court.

Mario A. Corti will resign his seat on the Crossair Board of Directors with immediate effect. André Dosé also resigns as head of Swissair effective immediately.

[Wheeliebin]

Some questions, if somebody can help???
1. Does this mean that Swissair have now actually ceased operating?
2. Are Crossair going to operate a significant number of SR routes?
3. Will the four Flightline aircraft continue to operate SR routes?

[Wheeliebin]

BBC now reporting that "Swissair are to avoid bankruptcy by cuting 2500 jobs". The situation certainly not very clear at the moment.

[ETOPS]

This is all an accounting device to ditch the huge debt burden and still have a "National" airline. What Crossair will do is take on those bits of Swissair they can make money with (Routes/planes/people) using the banks money and the remaining rump of Swissair will be allowed to fold. Creditors may see very little of their money. Crossair will then remname itself " Swiss Air Lines" ( neat eh?) and off we go again in a new smaller set up. As this precludes Sabena getting their 200 million ($/£/Euro'?) which was due today I think it's curtains for them.

[The Guvnor]

Two Swissair aircraft were impounded at LHR this morning.

This is an internal memo sent to staff at SR:

Oct. 02. At a media conference in Zurich on Monday, Mario Corti and representatives of Swiss banks and Crossair explained the events that led to yesterday's
announcements and stated that the solution found serves to maintain the existence of a Swiss airline.

In his comments on how this decision was reached, Mario A. Corti stated that the events taking place in the USA on September 11 will have a total revenue and value loss for the Group of some CHF 3 billion. By the
end of 2002 lost revenue stemming from operations will amount to approximately CHF 900 million. The terrorist attacks also resulted in reduced leasing-agreement
revenue of between CHF 1 – 1.7 billion. The
corresponding loss for the airline-related activities, and on the price of the units now for sale, was CHF 1 billion. This shock was too substantial for the Group to manage on its own.

In the past few weeks events came at the Group at a very rapid pace and the Group’s liquidity situation had become extremely critical. For this reason a solution was sought outside the traditional channels.

Swiss industrial representative Andreas F. Leuenberger stated that the measures being taken were extremely regrettable for the Swiss economy but that a ray of light could be found in the fact that there would still be a Swiss airline flying the skies.

Marcel Ospel, Chairman of UBS, stated that this plan was designed to save the Swiss civil aviation industry. It is a radical yet realistic solution. The strong Swissair brand should be maintained if at all possible. The banks will take no operational function in Crossair. According to Ospel the banks’ commitment amounts to CHF 1.35 billion: CHF 260 million for the purchase of Crossair shares, CHF 250 million for a bridging credit to SAirLines, and a maximum of CHF 500
million as additional operating capital for Crossair and CHF 350 million for a capital increase of Crossair.

Moritz Suter, Crossair Chairman, appealed for support for these efforts and reminded that the capital increase will only take place if the required permits and transport concessions are provided by the authorities. André Dosé, CEO of Crossair, presented the concept for the new airline. He stated that the very good local market in Switzerland, profitable segments of Swissair, the two well-established and respected brands and the advantageous cost structure and dynamism of Crossair were assets for the new company.

But the new airline must be smaller than the current Swissair and Crossair. As a result, the common aircraft fleets will shrink from 162 to 134 in number. Swissair will operate 24 fewer aircraft. This will also result in a reduction in staff. At Swissair this will amount to approximately 30% of employees. The
concept is currently being fine-tuned and will then be presented to the Board of Directors.

In the Q&A segment of the press conference Mario Corti further stated that the CHF 200 million that was to be sent to Sabena on Monday was not paid out.

[Doodles]

Are the two a/c said to be "impounded" still so or are they operational again? Anyone know what effects are on the rest of the SR network today?

[Spuds McKenzie]

Hey Wheeliebin,

Have a beer on me at the Hilton in LSZH.

Your friend who now lives in Godzone.

[clipstone]

So where does this leave the other "Qualiflyer" airlines? am I right that Sair still have substantial (49%) shareholdings in LTU and Air Europe as well a Sabena and therefore Sobelair?

[Doodles]

I've seen some press about LTU and obviously Sabena but very little on Air Europe / Volare Airlines in Italy. If SAir have 49% in that group as well who knows. With Sabena and LTU Swissair cash was needed for their business plans but I don't think that is the case for Air Europe/Volare. If so, they may be in a much better position but all looks very unclear at the moment.
Seems like a real mess

[WANDERLUST]

Swiss Air may downsize but will NEVER go under. The amount of finance that will be injected in SA through certain Swiss banks is neglegable. These banks are controled by a Swiss family group who also control these Swiss banks thru holding companies and stock holdings. The is a very old family who are completely above board and will never allow SA to die. The amount of money tobe injected is pee nuts to them.

[Wheeliebin]

G'day Spuds. Things changing LSZH big time. Who knows what will happen when the dust settles. Many job losses at SR, very sad. Not sure where we will be when it gets all sorted.
Hope your enjoying NZ. When (if) next in ZRH I'll have that beer for you, STAY CLEAR OF THE SHEEP!!!!!!!! :confused:

[The Guvnor]

Clipstone - Sobelair has already been sold to Preussag/TUI.

[Spuds McKenzie]

It is sad, Wheelie, indeed. I remember having several conversations at work about Swissair's strategy over the past couple of years. Generally we were shaking our heads in disbelief but never thought it would end up like this. I predicted that Swissair would end up in One World, now they ended up tits up. However the next step for Swissair 2 would have to be to join an alliance, which would be...One World. Otherwise: No chance.
BTW, spring is creeping in down here (26°C today!). And I've managed to avoid the woollen pigs so far (where are my gumboots?) :D

[Momo]

If you go to www.swissair.com (http://www.swissair.com) and check "Arrivals/Departures" from Zurich, you will see that the majority of flights are indeed listed as "Delayed" or "Cancelled". Delayed seems optimistic at this point. 4-digit flight numbers are operated by other airlines, and seem to be working normally.

Momo

[gofer]

Press release from Swissair

Swissair flight operations suspended – next decision at 14:00 Swiss Air Transport Company Ltd.
Corporate Communications

P. O. Box
CH-8058 Zurich Airport

Switchboard: ++41 1 812 12 12
Direct Dial: ++41 1 812 71 17
Email: [email protected]



Zürich, October 2nd, 2001

Zurich-Airport, October 2, 2001 -– Swissair’s flight operations were suspended at 12:30 CET. All aircraft that are currently airborne en route will continue their flights to their destination as scheduled.

Swissair is engaged in intensive negotiations with the banks to ensure the continuation of its flight operations. A final decision is due at 14:00


Air Liberte, Sabena and LTU, all of whom want money from Swissair, are the big loosers here.

European operations - all be it a little downgraded probably - should go to Crossair (LX).

The big question is what happens to the longhaul's.

Guv - want to change your mind and go MD11 - got 15 well maintained bodies for the highest bidder ???

[Tricky Woo]

A few interesting facts to mull over...

Swissair were strongly advised by McKinsey Consulting to adopt the strategy of buying foreign (Non-Swiss) European airlines as the main part of its expansion policy. The assumption was that non-Swiss airlines are badly run, and some 'proper' Swiss management would soon turn 'em around. Bloody foreigners, you can't trust 'em, you know.

A major player on the Swissair Board at the time was a chap called Lukas Mühlemann.

Lukas Mühlemann was for many years the CEO of McKinsey Consulting (Switzerland). His specific account was, (a bit embarrassing, this), Swissair. Ahem.

Meanwhile, Lukas Mühlemann has been a major player at Credit Suisse for nearly ten years, since he left McKinsey, and is now in fact the CEO. Credit Suisse is also a major McKinsey account. Chuck a brick in Credit Suisse and it'll hit a powerful ex-McKinsey executive square between the eyes. Nepotism? Perish the thought.

Any company's banker has a strong influence on its strategic initiatives.

The McKinsey advice was rubber-stamped by the Board, in spite of knowledgeable resistance inside and outside the company.

The strategy was proven to be a load of bollocks.

McKinsey Consulting legged it from Swissair when it became clear that their 'strategy' had pretty much broken the back of the company.

Lukas Mühlemann 'retired' from the Swissair Board during the previous crisis meeting, just a few months ago.

Just after Mühlemann's 'retirement', a market analyst 'retired' from Credit Suisse just after he wrote a 'totally erroneous and biased' report which clearly stated that Swissair was screwed and a clear 'sell-sell-sell'. The Swissair stock price remained high.

Swissair has just gone tits up.

The whole Swiss establishment is pointing at the WTC disaster as the root cause...

...which is a load of toss.

For some strange reason, Credit Suisse's exposure to the Swissair bankrupcy is strangely low, especially when compared to UBS. Any rumours relating this to the fact that Lukas Mühlemann is the CEO of Credit Suisse are totally without foundation. Clearly.

Lukas Mühlemann looked rather uncomfortable at last night's press conference, which was one of the few high spots of the occasion.


Do I hear the sound of keys rattling? Oh, I do hope so...

TW

[gofer]

Zürich, October 2nd, 2001

Zurich Airport, October 2, 2001 – Swissair has been forced to cease all flight operations today with immediate effect. Despite intensive efforts throughout the day, the company has been unable to obtain the liquidity needed to secure daily business and safe operations. It is uncertain at this time when flight operations will resume.

All Swissair flights had to be suspended from 12:30 CET (10:30 UTC) today. The decision that no further aircraft would be allowed to depart from Switzerland was taken at 15:45 CET (13:45 UTC). The aircraft currently abroad will be flown back to Switzerland as soon as possible.

Swissair regrets this measure, which has a drastic impact, especially for its passengers and staff. The action is being taken in what has traditionally been the strongest month of the year in revenue terms, and affects not only thousands of passengers but also thousands of jobs in and outside Switzerland. Far more jobs are now at risk than the 2650 announced yesterday.



[ 02 October 2001: Message edited by: gofer ]

[Topsrider]

SR has ceased all flight operations since 12:30h. The only aircraft flying are those which were already in the air heading towards LSZH.

[The Guvnor]

Tricky Woo - would, perchance, this be the same Lukas Mühlemann who, along with his counterparts at UBS came up with the bright idea of buying out Crossair to which they would then lend CHF 1 billion so that it could buy the viable parts of SAirGroup, thus leaving very little in the pot for anyone except secured creditors - who, strangely enough and I am sure by amazing coincidence, include said UBS and Credit Suisse? :eek: :rolleyes: :eek:

Who pockets the consultancy and structuring fees on this one? :D :D :D

However, the latest news from the SR website doesn't look at all promising:

Zurich Airport, October 2, 2001 – Swissair has been forced to cease all flight operations today with immediate effect. Despite intensive efforts throughout the day, the company has been unable to obtain the liquidity needed to secure daily business and safe operations. It is uncertain at this time when flight operations will resume.

All Swissair flights had to be suspended from 12:30 CET (10:30 UTC) today. The decision that no further aircraft would be allowed to depart from Switzerland was taken at 15:45 CET (13:45 UTC). The aircraft currently abroad will be flown back to Switzerland as soon as possible.

Swissair regrets this measure, which has a drastic impact, especially for its passengers and staff. The action is being taken in what has traditionally been the strongest month of the year in revenue terms, and affects not only thousands of passengers but also thousands of jobs in and outside Switzerland. Far more jobs are now at risk than the 2650 announced yesterday. "

[ 02 October 2001: Message edited by: The Guvnor ]

[gaunty]

Swissair
Finished, I don't believe it?
The worlds gone b loody mad! :eek:

[Momo]

Latest radio reports here in Geneva suggest that passengers in Zurich have been told that their tickets will not be reimbursed. The radio report also said that a lawsuit has been filed against the board of administration, demanding their imprisonment. I did not follow who brought the lawsuit. The radio also says that either Sabena or the Belgian Government has asked for 1.5 billion SFr. in damages.

(Despite this being on the radio, I consider all of the above to be rumours.)

Momo

Momo

[Notso Fantastic]

Thanks for very informative and level headed background reports chaps, particularly Tricky Woo. What a tragedy! Yet another brilliant airline brought down by bizarre Management antics. Did Ayling work for them at all? Swissair was one of the mainstays of airline life- the best respected airline in the industry. Sympathies to the many staff who must be wondering what the hell is going on.

[380]

An Expression of Sadness

Let me state right at the beginning that I’m only a wannabe and I do not financially, nor professionally depend on Swissair, but you can’t imagine how emotionally affected I am. And I think I speak for a big part of the Swiss people ,the Swiss aviators and especially the wannabes.

Since 70 years Swissair has been a symbol of our national pride. It has been a symbol of safety, punctuality and good service. And last but not least it carried our flag on the tail around the world, marked our presence in the world and showed that the best airline comes from Switzerland. It has always been the deram of every little boy to become a pilot and in Switzerland that meant automatically a Swissair pilot. My father applied at Swissair in the early 60ies. He was rejected, but still, as aviator he remained a Swissair fan. When I was a little boy I often went to ZRH with him to see the planes. And I always said: “I’m gonna be a Swissair Jumbo captain”. Ten, eleven or twelve years ago as schoolboys, our class could visit the former SLS (means approx. Swiss Aviation School). From then I knew that I’ll choose the profession of pilot. I think at this time Swissair was relesed into the free market. During this ten years we heard some bad and worse news. But we always said: “forget it, Swissair is a good enterprise”. We simply couldn’t imagine that this enterprise can run out of money. Then we saw how lower middle class airlines joined the Qualiflyer Group and how the best airline besides Swissair (Austrian) jumped off. But we just said: “don’t worry, Swissair is a good enterprise, it can’t run out of money”. Then Bruggisser was fired and the whole disorder came to the daylight. Slowly we began to realize that Swissair is in troubles. "But OK, every company gets once in troubles, Swissair will manage this. And if they were in serious trobles the government would help them, because this is a national interest". And then in the last days we realized that there are serious problems of cash. But we thought: “ The banks will give credits and if not the govt will help”. But nobody helped and now Swissair is bankrupt. Impossible,.....incerdible...... Ervery government would have helped its national carrier, but ours didn’t....... It’s just incredible...... OK, Swissair was in the free market but somehow it was still a state enterprise, people identified with Swissair, it was just something really Swiss. I can’t believe yet the news of today....... Nobody thought that it would happen so fast and that it would be so surprising...... Maybe we didn’t want it to see, maybe we were all blinded of our national symbol and didn’t ask ourselfs wether the strategy of the past 10 years was right........

I’m not so concerned about finding a pilot job maybe I’ll stay a wannabe a bit longer, I do not really worry about that. But still I’m very, very sad that Swissair stopped to exist, because I think it is or was the aim or dream of every Swiss aviator to become a Swissar captain. And I’m very, very sorry for all those fellow pilots and ground staff fellows, who will lose their jobs. Good luck to all of you!

So, I’m done, wanna get rid of my frustration. Comments and reactions are not expected but still welcome.


380

Good bye Swissair
:( :( :( :( :( :( :(

[skysheriff]

Even the Swiss banks did not want to get involved with a debt of 10 billion US dollars
This did not go well with the swiss apparently. There is a talk of the board of administrators being sued and emprisoned. So its not always pilot who pay the price.
By domino effect i fear that many airlines will be affected, not only swissair group
(LTU, LOT, SAA, Sabena (Sabena has no more cash to pay salaries this month), AOM, Air liberte) but various code-shares also.

[J-Class]

Well, it's obviously a sad day and I do hope that the banks succeed in creating a successor airline which can rise from Swissair's ashes - not least because I did rather enjoy the chocolates they served on their flights... It's quite possibly a smart deal for the Swiss banks, so long as they can flip out of their position before too long. I don't think Osama Bin Laden needs to worry at all about his deposits...

But it's also a very important day for international aviation. The idea that each European country can afford to prop up a national flag carrier surely dies today. One of the contributors above wrote about the emotional importance of Swissair as an ambassador for its country - well, that's all very well, but few contries can afford ambassadors that lose hundreds of millions of dollars every year. Hopefully what this means is that large scale European airline mergers are finally a genuine possibility. BA/KLM may rise from the dead (and indeed BA/Swissair might also have some legs). In any case, British readers can feel some comfort in the prospect that, as the country in Europe with the most successful experience in managing airlines (BA, VS, even EZ - it's a pretty impressive group), the UK's stake in this industry may very well increase.

The second issue highlighted today is the global political position of Switzerland, which has resolutely hidden behind its mountains over the last 30 years in an attempt to pretend that a modern, functional European Community was not coalescing around it. Arguably, had Swissair been an EU airline, it would never have adopted its disastrous strategy of acquiring minority equity stakes in neighbouring countries' airlines in the first place. The situations are scarely comparable, but just as the Sept 11 tragedy has done much to rid Americans of the idea of their exceptionalism, the collapse of Swissair will cause many Swiss to wonder again about the advantages of standing alone.

[ 02 October 2001: Message edited by: J-Class ]

[GlueBall]

Bankrupt management precedes bankruptcy. But airlines don't run out of cash overnight. Already in earlier years SR Top Dog Philippe Bruggisser and his gangster management team had siphoned airline revenues into ancillary activities under the SAirGroup enterprise, such as Swissport, Sabena, Swisshotel... It's a shame for the Swiss government, and the Swiss banking group to allow a corrupt management to run such a distinguished airline into the ground.

Since SR is a non EU airline, it's entirely conceivable that Swiss taxpayers will eventually have to pay to resurrect the airline.

[MEVERTSGB]

If any of you guys are looking to buy shares in airlines, make sure they are ad hoc charter airlines. Seems they are picking up all the work at the moment. By the way, pilots who left charter airlines to join the scheduled carriers need not re-apply for jobs. Goes without saying, doesn't it ? Besides, the money they pay will not cover your mortgage.

[411A]

Is there a prison large enough to hold the SR management, past and present? Sure hope so because that is where they clearly belong.

[skymarshal 1]

Has been confirmed all SR flights ex Man to be operated by Cossair Jungle jet from 4th oct with different flight numbers also.

[Mishandled]

As an employee who is directly affected by the whole mess that SR finds itself in, I can express my feelings in this order 1. Sadness, 2. Anger, 3. Anger, 4. Anger 5. Anger ad nauseam. Sadness for all the good people who are about to lose their livelihoods, and the stranded passengers holding worthless coupons. The anger is directed at the mismanagement of the whole group starting with the ludicrous policy of buying a hotch-potch of airlines in order to create an alliance. The whole concept of alliances is to combine strengths, the Qualiflyer alliance combined the strength of Swissair with the weaknesses of other airlines, whilst creating a whole mound of debt. (Austrian excluded, but they left). Why didnt SR bite the bullet and try to join a major alliance? (water under the bridge I know). Sabena!!!!??? I won't even go there. The board of Swissair Group, self enriching fatcats. The Swiss government could and should have done alot more both in terms of subsidy (I know, I know its a private entreprise that should survive or fall on its own), and in terms of pressure on the gnomes of Zurich, who seem prepared to allow a recession in Switzerland. The multiplier effect of SR going down is going to be immense, but I guess that wont be of concern to the *ankers, as they will still get their bonus. Anyway, to all my colleagues and those adversely affected by this situation, good luck, and to those that caused it, I hope you get what you deserve (which of course you wont baecause theres no justice.) :mad:

Edited cos I cant type

[ 03 October 2001: Message edited by: Mishandled ]

[Hooking Fell]

gofer:

Lukas Mühlemann is not just another w anker (sorry, ought to have typed "banker") but also one of that unique Swiss product called "professional board member". A rather fleeting glance across the Swiss corporate landscape will tell you that a strangely large number of boards (Verwaltungsräte) of public companies are made up of more or less the same people. In Switzerland, it's called "Filz" (= felt), in more enlightened parts of the world, it's referred to as incest.

It's the situation where the only qualification you need to get on the board of one company is a seat on another company's board. And how do you get that? You bootlick your way up the part-time army ladder, until one of your officer friends gets you into your first board seat.

Mühlemann is a particularly nasty fellow, for as Credit Suisse CEO he orchestrated the dismissal of an in-house analyst who, early this year, predicted SAir Group would post a CHF 0.5 billion loss. Obviously, Mühlemann either knew better (i.e. that the actual loss was to be far in excess of this figure) or knew nothing at all (i.e. had no idea of the financial position the company whose board he sat on was). The result was that he had this analyst fired and that Credit Suisse kept on issuing BUY recommendations of Swissair stock.

You can look at it either way: either Mühlemann is a con-man or a stupid foocker. Neither should have qualified him for a board seat on any public company, and Credit Suisse would be well advised to get rid of this a$$hole.

:rolleyes:

[Delboy]

In reply to J-Class, the assertion that the EU is 'modern and functional' is laughable. It is the sclerotic practices of the EU, which have contributed to the failure of EU airlines to modernise. Subsidies to Sabena, Alitalia and Air France have been cloaked in other guises. I have no doubt that some form of words by corrupt politicians and bureaucrats in Brussells will provide the vehicle for further subsidies for Sabena.
True democracy does not exist in the EU, leaving the EU Commission and its bureaucrats unaccountable. This 'modern and functional' EU is the road to dictatorship, with which Spain, Portugal, Greece, Italy, Austria and Germany are familiar.

[J-Class]

Delboy, I'm not suggesting the EU is perfect, but I really hope you're wrong on how it will react... I see the Swissair collapse as the straw that broke the camel's back on EU subsidies for hopeless airlines. Let them consolidate. The US services its 260m citizens with just over a handful of major airlines... we on the other hand believe any EU member with over 10m people deserves its own heavily loss-making international airline. I can list a whole bunch of flag carriers which would be consolidated out of existence very rapidly given their performance and the limited size of their domestic markets:

Swissair (Switzerland: population 7.2m)
Sabena (Belgium: population 10.2m)
Aer Lingus (Ireland: population 3.8m)
Austrian (Austria: population 8.2m)
KLM (Netherlands: population 16.0m)
TAP (Portugal: population 10.1m)
SAS (Sweden 8.9m; Denmark 5.4m; Norway 4.5m)

It's interesting that you have to aggregate the populations of Switzerland, Austria, Ireland, the Netherlands, Portugal and Norway before you get to 60m, the population of the UK. And that, friends, is one reason why the UK can genuinely support an international airline (or two!)

[Momo]

A bit simplistic, I think. Swissair was in great shape until 1998. Since then, it is difficult to separate the Swissair activities from the other investments.

The need for synergies and consolidation depends on what the strategic objective is. If the objective is TWD (Total World Domination), consolidation is essential. If the objective is "to be viewed as the airline with the best service in the world", while returning some % on shareholder equity, consolidation is irrelevant. As I reflected some time ago, the Swissair Mission statement is/wan unclear. TWD by controlling foreign airlines? I think not. "To be viewed as the best service..." Nope. So what?

Momo

[allthenines]

Skymarshall, If Crossair are taking the MAN flights where does this leave Flightline who were operating 4 aircraft on behalf of SWR?
:(

[bateleur]

Insularity and incest - there you have it. One of these days the Swiss will have to realise that they'll have to drop their 'We're better than the rest of the world,' attitude and join in with the rest of the world (rather than buying up weaker bits of it or simply standing aloof and looking after money).

They'll also have to get rid of their cosy little incestuous cartels which keep prices sky-high here. This place is riddled with them - everything from petrol to property.

I'd like to think that the apalling and shameful demise of Swissair will be the shock that does it, but I have my doubts. The fat cats never suffer.

My sympathies to the SA staff who (so I hear) while facing the threat of unemployment, continue to deal with (justifiably) irate passengers in a professional manner.

bateleur

[ 03 October 2001: Message edited by: bateleur ]

[Tricky Woo]

Hooking Fell,

Lukas Mühlemann is the ex-CEO of the Swiss branch of the most powerful Consultancy on the planet, plus the existing CEO of the fifth biggest bank in the world. Take it from me, he doesn't need a walking stick to find his way around a balance sheet.

You ask if he's a "nasty f**ker"? Er, let me think about that one for a micro-second.

TW

p.s. For my next performance, I'll enlighten a few of you on yesterday's conduct of the 4th biggest bank in the world, UBS.

[Tricky Woo]

Where was I? Oh yeah, time to have a pop at UBS...

TO RECAP

UBS and Credit Suisse basically buys Crossair, leaving the 'rump' of Swissair to live on oxygen for a month, until various assets, people, aircraft, services, etc, can be moved over. Crossair's future is looking good, then. A quick rebranding later to Swiss Air Lines, and the job's a good 'un.

But how is the remaining 'rump' to survive until then?

During Monday evening's press conference, UBS and Credit Suisse (Marcel Ospel and Lukas Mühlemann) promised rather a lot of money in FULLY SECURED loans to enable the Swissair to remain in service for a month.

The fact is that both the long-term Crossair and the short-term Swissair deals are extremely viable. Great idea, to be honest.

Before, during and after the press conference, that poor sod Mario Corti stressed to all and sundry that if the Swissair dosh wasn't in their account by 10:00am, then he'd have no choice but to suspend the Swissair services.

UBS failed to put the money into the account, and the rest is sad recent history.

PUBLIC CONJECTURE

So why wasn't the money handed over? Seeing as Mario Corti immediately went public with the fact that in spite of repeated attempts to contact Marcel Ospel (UBS), no reply was given before, on or even after the deadline had passed. Corti then outlined the sad story that he had had conversation after conversation with Ospel's assistant who basically informed him that Ospel was washing his hair that morning, and could not be contacted.

So, off we go with the conspiracy theories: "This was always the plan by UBS to let Swissair go to the debtors, while remaining in ownership of Crossair". UBS has a far larger exposure to Swissair than Credit Suisse (As I explained in a previous post) so maybe this is their way of trying to ease their way out of it.

Therefore, UBS are this week's example of ruthless, evil capitalists. Naughty, naughty UBS.

Meanwhile, we've got bomb threats at UBS's headquarters at Paradeplatz, plus a bunch of Swissair staff marching on UBS Warburg's building near the airport, waving pitchforks and burning torches.

Also, people all over Switzerland are now closing their UBS accounts, I kid you not!

TRICKY WOO'S ANALYSIS

What a load of bollocks.

By ensuring that Swissair suspends its services, UBS and Credit Suisse stand to lose access to what was the credible, reputable Swissair brand. The last thing they wanted to do was to ****** up Swissair. Furthermore, a fully collapsed company is a much harder proposition when it comes to recovering or transferring assets.

Nah, it doesn't rub.

TRICKY WOO'S THEORY

Never underestimate the capacity for the fourth and fifth largest banks in the world to simply f**k it up. Listen to me, folks, 'cos I know what I'm talking about in this respect.

A couple of us here have put our heads together and came up with the following scenario:

UBS underestimate the seriousness of Corti's deadline, but basically wanted to get the money over promptly, anyway. Marcel Ospel hops onto an aircraft to New York (More on this later) leaving instructions to get the money transferred over.

As far as he's concerned, his work is done. "Thanks, Supermarcel!"

The most senior payments clerk in UBS (1st class, with commendations in the field) gets into work yesterday morning, only to find a payment instruction for zillions of Swiss Francs lying on the keyboard. The clerk immediately does... absolutely nothing, 'cos there's something incomplete on the instruction, a missing signature, or whatever. "More than me job's worth, mate".

The clerk then escalates this small matter to the boss, who panics 'cos this is all rather unusual: such a serious matter clearly requires further escalation.

Seven tiers of management escalation later, the bit of paper arrives at Marcel Ospel's desk... unfortunately, he's on an aeroplane. Ah well, better shove it in his in-tray until he gets back.

And so the Swiss national carrier's slid into history.

SUMMARY

The Swissair brand is worth two and a half New Pence right now.

The Swiss man on the street wants Marcel Ospel beheaded in the Needlepark. (Why not Lukas Mühlemann while they're at it?)

The Swiss government are threatening both UBS and Credit Suisse with a full books open 'audit' on everything to do with the Swissair fiasco, past, present and future. (Good).

The new Crossair shares doubled in price on the market today, therefore both UBS and Credit Suisse have just made a bit of a killing. How nice for them.

The Swiss banking industry is in a much bigger doghouse with their government now, than they ever were for stashing tonnes of Nazi loot in their coffers.

Mario Corti is looking to be a bit of a sweetie, seeing as he's put his life and soul into rescuing this bollocks situation of someone else's making.

That 'someone else' includes Lukas Mühlemann, but we can now toss Marcel Ospel onto the bonfire.

What a f**k up.

TW

p.s. Marcel Ospel was flying to the US in his corporate jet. You didn't think he'd risk his schedule by flying with an insolvent airline, did you?

[skymarshal 1]

Allthenlines
Not certain whether FL 146 aircraft will be part of new SR plans, but I believe FL were operating a substantial number of sectors before this in Europe for SR.

Considering A310, A320, DC9 types have been used over the years by SR, this is a major downsize on this MAN route, hope things will return to normal.

[TFR]

Excellent post TW.

But I don't subscribe to your cock up theory I'm afraid.
Surely UBS (whose boss Marcel Ospel is a pal of Moritz Suter Chairman of Crossair) doesn't make "mistakes" like that?

Both UBS and Crossair gain A LOT from SR's demise.....not least in the negotiations with the ex-SR staff they will HAVE to employ to run a long haul operation.....how better to get them to acccept Crossair salaries/conditions than to shaft their employer as painfully, publicly and quickly as possible?
And UBS need to protect their new investment in Crossair by extinguishing SR as soon as possible.

And as you mentioned, the banks have earned 20% profit today on their purchase of the Crossair shares previously owned by SR..........

Nearly forgot......and of course, Suter doesn't think much of SR.....he also needs to get revenge for having been called in to rescue it (managerially) in January this year only to "resign" 6 weeks later.........

[ 03 October 2001: Message edited by: TFR ]

[Hooking Fell]

Tricky Woo,

Indeed, Mühlemann is ex-McKinsey, the same crowd who encouraged Swissair to go pursue a megalomaniacal expansion strategy, buying up a variety of no-hoper airlines from microeconomies on the way.

If, as you say, Mühlemann is reasonably proficient in reading a balance sheet, then why did his own bank (CS) fire one of its obviously brightest analysts earlier this year? As I have stated before in this forum,
either Mühlemann already knew the true dimensions of his monumental f#ck-up at SAir Group, or he did not.

In the former case, he would have had to stop his own bank (CS) from issuing "buy" recommendations on SAir stock.

In the latter, he should not be on any board.

In either case, he's a w anker.

Thanks for corroborating my case, Tricky Woo.

[Tricky Woo]

Hooking Fell,

I've already stated that CS's exposure to Swissair is suspiciously low. My guess is that their exposure six months ago was much, much higher. Under those circumstances, it's normal practice to ensure that the applecart remains upright while slowly and discretely offloading debt and shares.

There's no doubt that CS was broadcasting either a 'hold' or a 'buy', but that doesn't mean that the internal investment departments were responding!

As regards UBS's 'evil plot', I stand by my cock-up theory. The internal processes of these banks are pathetic.

TW

[Hooking Fell]

TW:

I'm still trying to digest your "cock-up" theory.

Considering that this is the same crowd who still find nothing wrong with people from Nigeria, Congo and other "busted ass economies" routinely depositing funds in excess of their respective country's GDP, you're observation that this might just be a monumental "stuff up" is rather charitable, to say the least.

I'm surprised they haven't decided to call whatever corporate entity that's eventually going to take to the air again "Bünzli Airlines".


:p

[F/O Junior]

As we slowly resume our flight operations, it gets clearer and clearer that mainly UBS deliberately delayed the payment of the promised money in order to seize our flight operation. This highly accelerated the chances for Crossair to take over our flights as the BAZL promptly handed over our licenses to them. Many fear that this hostile take over was planned on a long-term basis by Mr. Ospel, Mr. Mühlemann and Moritz Suter.
I did one of the last SR flights on the 3rd, coming back from JFK with all SR crews (5) on board. It truly was an odd feeling.

[The Guvnor]

My dear Arctic Wolf - just to confuse matters, are we talking European billions (ie 1,000,000,000,000) - or the US one (1,000,000,000) - ie a European milliard?

To be fair to SAirGroup, the figures your quote are the gross liabilities - against that they have plenty of assets (especially Flightlease). Even so, I'd suspect their nett debt still has to be into ten figures; especially given the current market for aircraft!

[Richthofen]

There are rumors that UBS (United Bandits Switzerland) pulled the trigger in order to collect some additional millions of cash from passengers who never flew on already purchased tickets... nor having a chance of refund.

Makes sence for "UBS"

[gofer]

The media blurb from Swissair yesterday.

Zurich, October 4, 2001 – With a new potential conflict of interests arising following the acquisition by the Credit Suisse Group of a shareholding in Crossair, Lukas Mühlemann, Chairman & CEO of the Credit Suisse Group, announced his intention to resign from the SAirGroup Board of Directors after discussing the matter at the SAirGroup Board meeting of September 30. The Board formally noted Mühlemann’s resignation – which is effective today – when it met today, October 4.

“Now that the Credit Suisse Group has acquired an equity holding in Crossair, I am stepping down from the SAirGroup Board of Directors,” Mühlemann said. “I would like to stress that my resignation in no way diminishes my responsibilities arising from my period of office as an SAirGroup Board member.”

Given some of the comments in this thread - Laugh ? I nearly cried.

So you really want to help - fly Swissair between now and then !

Guv - in those quantities a few zero's more or less, unless they are in front of the decimal point on the severence cheque, who really cares - as dark red as that looks very much like dried blood.

Lobo(or may we call you'Can'?) - can't agree more about the 29th Oct. Hope only that 20+ days get some semblence of semi-clarity and organisation on the line.

[Cyclic Hotline]

There has been a lot of very intelligent, informed comment on this topic, on this thread. Now, much of the same in this article. Having been through this cycle a couple of times, I feel for all the employees who will be affected by this.


Swissair fiasco was foreseeable

Commentary: Hubris, not attacks, led to grounding

By Paul Erdman, CBS.MarketWatch.com
Last Update: 3:25 PM ET Oct. 5, 2001

SAN FRANCISCO (CBS.MW) -- In one of the biggest corporate fiascos of modern times, Swissair, Switzerland's national airline, which has always been the pride and joy of that country, was forced to ground all its planes on Oct. 2 due to the fact that it was dead broke.

It was already way past due on millions of dollars of fuel that it had bought from oil companies, and now faced the real threat that its planes would be seized as collateral if they landed in London or Paris.

Tens of thousands of passengers were stranded worldwide, and some were finding out that other airlines would no longer honor the tickets that had been issued by the now bankrupt company.

The final straw that broke the back of the airline was the refusal of the Swiss government, which had an emergency meeting, to bail out the airline. The two giant Swiss banks, UBS and Credit Suisse also just sat on their hands and let the airline twist in the wind.

The reason: They had just completed what amounted to a reverse takeover of the only really viable asset of Swissair by buying 70 percent of its subsidiary, the regional airline Crossair, for a mere 258 million Swiss francs.

On Oct. 3, 10,000 Swissair employees -- its total work force is 72,000 -- gathered in protest outside the headquarters of UBS in Zurich claiming that the bankers inside had deliberately engineered this in order to steal their national airline for a song. The bankers told them to take a hike.

The holders of Swissair shares and bonds had already taken a bath in that they now held essentially worthless paper. Swissair has been delisted from the Zurich stock exchange and removed from that exchange's index.

Thousands of Swissair employees lined up in front of the counters of the "house bank" - similar to a credit union -- that Swissair had established for them in a desperate attempt to get their savings out before it was too late. The airline limited withdrawals to a few thousand Swiss francs.

All this goes back to an ill-fated plan that the top management of Swissair -- for the most part "graduates" of McKinsey -- had cooked up, aimed at making that company a major player in Europe by taking financial control of two regional airlines in both France and Germany, as well as a majority interest in Belgium's national airline, Sabena.

All of these investments proved to be fiascos, and the cash that Swissair had to keep pouring into them in order to keep them alive eventually bled Swissair to death. An analyst for Credit Suisse, which was the house banker of Swissair and whose CEO sat on the airline's board, put out a warning about all this already 18 months ago. They fired him the next day.

How many Swissair shares were subsequently stuffed into the accounts of Swiss bank clients remains to be seen. My guess is that the only ones who are going to come out of this making a lot of money are Swiss lawyers.

A plan -- called Phoenix, of course -- to temporarily stave off a complete collapse of the national airline has now been put into place by the Swiss government. It will provide 450 million Swiss francs of liquidity to Crossair/Swissair so that it will have enough cash to pay its employees as well as to buy fuel and food and thus allow the airline to get perhaps half of its planes back in the air.

That money, it is calculated, will run out on Oct. 28. The size and shape of the surviving Crossair will then be decided by its new masters, UBS and Credit Suisse. It will be but a shadow of what Swissair used to be when it was regarded by many to be to Europe what Singapore Airlines is to Asia. Ten thousand Swissair employees will now lose their jobs. Zurich airport is finished as a major transportation hub and thousands more will be out of work there. Tens of thousands of shareholders and bondholders are also left holding an empty bag.

All are victims of hubris -- hubris that was taken to new heights by Swiss managers who are the highest paid in Europe and Swiss bankers who have once again lived up to their reputation as the gnomes of Zurich.

What a pity.

[Cisco Kid]

Good informative stuff,but as I like to keep it simple ,could it be that some of the major players in this debacle were merely a bit thick? Think about it before you follow any "professional" financial advice,especially in Switzerland !

[the maker]

Please note that the debt Ansett had before going down was about 2 b. Euro, when Lufthansa's pilots took a 20% paycut to save the company in the early 90's was about 5 b Euro, and now Swissair with 10 b Euro. I think it is pretty against the odds they are still flying.

Conspiracy theories.....?