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View Full Version : Swissair takes bite out of Belgian and suffers severe indigestion


exeng
2nd Jul 2001, 20:19
Today's Flight P.27 has an interesting article on Swissair's bid to extricate itself from a deal to increase it's stake in Sabena from 49.5% to 85%.

Swissair CEO Mario Corti says "Sabena is running operating losses. We cannot continually pour in new capital only to have it spent."

The Belgian government has now said it will sue Swissair if a settlement is not found.

What on earth were Swissair management thinking when they bought into Sabena? If they were offered shares for nothing it would have been prudent to refuse but to buy into it, the mind boggles.

Perhaps another example of appalling boardroom mismanagement that seems so common these days in the airline industry. Will we see nice payoffs to the management leaving Swissair staff to pick up the pieces I wonder?


Regards
Exeng

You splitter
2nd Jul 2001, 20:39
I thought that the management that got them into this situation had already gone?
As far as i was concerned MArio Corti was heading up the new style of running the Swissair group.
Quite how they will get out of Sabena I don't know.
I've heard that while job losses could not be ruled out, there will be no pay cuts. And encouragingly Mr Corti has declared that some of the major problems are in management structures. Although it would be unfair to just critise that area. There are other problems.

IMHO I don't see this as being a 'lets screw the staff' scenario. The impression I get is that they are treating this as everyone needs to work together and everyone will have to make sacrifices.

Not sure if all the staff have this attitude but those I have spoken to sounded pretty optimisitc.

exeng
3rd Jul 2001, 04:46
Thanks Splitter,

I had not realised that the management team in place had not been responsible for this fiasco.

By the way what happened to the previous lot?


Regards
Exeng

BahrainLad
3rd Jul 2001, 08:43
Golden rule of business....never try and run an airline in Belgium.

Mishandled
3rd Jul 2001, 10:50
Todays press release from Swissiar;

Swissair Group made offer to Belgian Government to resolve Sabena situation

Zurich Airport, July 2, 2001 The Swissair Group today made a revised proposal to the Belgian Government to resolve the Sabena situation.

The new proposal provides for the two shareholders, Swissair Group and the Belgian Government, to jointly contribute Euro 275 million to Sabena, which would be immediately available to the company. In addition, Swissair Group would provide a Euro 30 million subordinated term-loan to Sabena.

The Euro 305 million should allow Sabena to continue operating provided the Sabena management meets the operational objectives of their proposed business plan. In return for the Swissair Groups offer, the 2001 agreement would be reversed and, accordingly, the Swissair Group no longer obliged to increase its stake in Sabena to 85 per cent and would also discharge the Swissair Group from any further financial engagement towards Sabena or the Belgian Government.

For further information please contact

Swissair Group

Financial Dynamics:


[This message has been edited by Sick Squid (edited 03 July 2001).]

AEROVISION
3rd Jul 2001, 19:34
The end is near ??
Belgian government today announced that they will take Swissair to court for not honouring their commitment to increase their stake to 85 percent.

Try to get money out of the Swiss if they do not want to give it to you.
Belgian government should know better.
BTW, 12000 jobs.

best regards
AV

You splitter
3rd Jul 2001, 20:24
The Belgian government must have been rubbing their hands together with glee when SR promised to take up to 85% stake into Sabena.
Maybe someone would be kind enough to clarify this, but I believe that the Belgian's have some of the wierdist employment laws in the world. It's far cheaper for the government to pour money in year after year than for the airline to go bankrupt. If the Sabena employees are made redundant then they don't get 'dole' money. Thay get paid by the government whatever their salary would have been!! Having said that laying people off would be nigh on impossible anyway.
I assume that if SR stick to this deal, there is also something in place stopping them from just closing it down? If the swissair board want out that much then with an 85% controlling stake they could.

Cisco Kid
3rd Jul 2001, 21:03
Many have tried none have succeeded! Sabena in its 40+ years of existence has Never repeat Never, made a penny,( sorry Euro) ,profit.Although not a bad operation per se ,improved by massive capital injections & service know how from the Swissair Group it never really had a chance; unless continually subsidised by tax payers money, as this is no longer permitted (officially)not that it makes much difference what can Sabena do? Bad management on all sides incl. sr . group has been replaced by professionals in Switzerland,who sadly seem to be locked in to an obligation to replace the belgian tax payers as the official cash cow ,no wonder the politicians are pissed off ,it upsets their budget.Come on folks the only winners here will be the lawyers ,all staff incl. pilots at Sabena & Swissair will feel a cold breeze,take the money! the Swiss wont up the ante! & try not to piss it away this time .On a more positive note 10 recent graduates of the Sabena flt. academy have been taken into SR. as trainee F/O s ahead of their own Swiss students,why ?..because an agreement was reached 6 months ago & the Swiss despite all their problems have honoured that agreement!would this happen in Belgium I dont know ! perhaps not .Some things are just not meant to be & Sabena in its present form is one of them ,I hope all employees do not suffer too much hardship & as few aircrew as possible are laid off ;personally I blame Jimmy Carter he started this deregulation game .as a reminder R.I P. PAN-AM .EASTERN AIRLINES. Canadian-Pacific, Braniff ,Air Florida ,People Express,& many more also in europe & worldwide. Rgds Cisco ..also just an employee.

Flying_Steph
3rd Jul 2001, 21:33
I'm really curious to see what will happen next !

"I wanted to take over your shitty airline and make lots of money with it but I was wrong and screwed up big time. Now you're in deeper trouble but I don't care because my share holders are more important than anything else. I won't keep my promises to help you, sorry, good luck, and would you please get of out here fast or I call security !"
Ain't that too easy ?

ironbutt57
3rd Jul 2001, 22:16
Now that Belgium has the EU presidency, let's see what kind of inventive plan they have concocted to inject more state aid into Sabena...can't imagine them letting sink (as it should do)

Cisco Kid
3rd Jul 2001, 22:24
Sometimes lots of money was made & the airline & shareholders were screwed anyway!remember Lorenzo & co! In the words of the immortal Groucho Marx "Ive been rich & Ive been poor , rich is better"Sauve qui peut.!

DPIT
3rd Jul 2001, 23:51
Exeng,

The problems at SwissAir, I think (please someone correct me!) were caused by the complete f**k ups of two VERY big, international consulting companies (not going to name them...not sure about naming names on a public forum!!!) who came up with the strategy that has(?) completely ruined SwissAir. I am not a fan of strategy consulting firms (you pay them a fortune and they tell you what you already know!!!) and this has proved me correct. The senior management that actioned the consultants plan (aslo to blame), has I think mostly all gone now.

Sabena are now in deep trouble. The Belgium government cannot inject any money as this would fall foul of EU rules. If someone doesn't then it will go under. If the Belgium government then demands compensation from SwissAir legally, that could send SwissAir over the edge.

A tricky situation for all concerned. I am sorry for all the poor people that work for both companies; All caused by two consulting firms, and a completely incompetant senior management.

[This message has been edited by DPIT (edited 03 July 2001).]

PENNINE BOY
4th Jul 2001, 00:45
Never mind the good old B.C.A will have to work hard now!
They screwed the contract pilots of the E.U. With arthur scargill tactics who worked in Belgium,What goes round comes around!!!
Try PPSC for a Uk ATPL!!!!

Cisco Kid
4th Jul 2001, 00:52
DPIT .your 100% correct ,but airlines take an awful long time to die,like casinos the cash flow is too good to be true .SR & Sabena will still be around for years ;albeit not in their present form ,competent senior management usually avoid the airline sector -too much risk & relatively low compensation,banking offers much better returns lose a few billion in South America ,who cares ? lend m more so they can pay the interest? plus no pesky employee organisations to deal with,but seriously the level of senior airline management in Europe is a scandal.It would be so much funnier if thousands of people did not have to rely on their ability.

Cisco Kid
4th Jul 2001, 01:01
Didnt know about the B.C.A ,naughty boys !it does pay to help other E.U pilots you know,jobs available in hotter climes ,start writing them ole cvs

Few Cloudy
4th Jul 2001, 19:42
According our local rag 30 odd Sabena union people have occupied a Swissair 321 and kept it on the ground in BRU.

FL310
4th Jul 2001, 21:37
The red-tail plane looks nicely surrounded by all kind of ground vehicles on parking 350.

Sad to see this happen but, was this not indicated at all since months?
The so-called swiss-precision works on chocolate and sometimes on watches, getting their fingers into the EU has never worked anywhere.
Wonder who sits laughing at home with all the Bus-bribe money as the dramatic fleet changes in SR as well as SN has started the final money issue.

Sad for SN and all involved, all measurements introduced will show some turn in the situation, the question remaining is only, will there be enough time to proof it.

Let's keep the fingers crossed as this is not an impact an Belgium alone, it will hit all Europe and most probably the impact will destroy chances for plenty who hoped to find their job in the present pilot-friendly situation.

twinboom
5th Jul 2001, 02:13
Hi DIPIT.
No, Go ahead, "name and shame" provided that you state facts or, alternatively, an opinion which is clearly such and thus honestly held. That is within "Danny's rules" as I understand them.
Can you enlighten us based on inside information and/or personal knowledge/experience. I for one would be very interested to learn how so many alleged competent executives got involved with / persevered with an organisation which was and is a clear and total basket case for so long, and Why?!!!!! 'tis not just hindsight BTW - I turned down a job on those grounds. Sorry for the guys and gals but in the end the Cash runs out - and thats IT.....

Hunter58
5th Jul 2001, 18:28
SO basically, if I understand right, you want me as a Swissair shareholder (I did not chose to be one, that was a compensation instead of cash for the 'good' work done, and I did not get the option of saying: no, keep the f***ing paper! while I was still there) to eternally subsidise Sabena, which ONLY ONCE in it existence did make a profit, and that under the terms of SAirGroup, as it was called at the time. Good, you can have that, but at MY conditions.

For some reasons all the Sabeniens always forget, that it is not the nostalgia of having ad a great network that makes a good airline, but the cash you were able to make. Your (probably ex-)colleagues at Swissair are just learning the hard way.

The sad thing is, that politicians get involved now. I can understand that the Belgian politicians are so unhappy, but they should be very happy about Swissair; at least the Swiss were able to maintain Sabena 5 years longer than the government ever did. Without Swissair, Sabena would have died long ago. And now that they figured out that they did not have enough cash on their own and want to divest, the belgian politics (who are soooooo famous for their efficiency, like e.g. in the DuTrou case!!!!!! http://www.pprune.org/ubb/NonCGI/frown.gif ) start to shout and scream. Good, take them to court, spent a lot more of the taxpayer's money and end up having nothing.

It's easy to blame others, but you should never start with that before you cleaned out your stable FIRST! And the Belgian stable is very dirty!

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There's nothing like a three-holer...

Stratocaster
5th Jul 2001, 19:49
Hey, easy folks... We're not gladiators
;)

Hunter58, what did you mean by "Swissair collegues are learning the hard way that it is not a great network that makes a great airline but the money it makes" ? I thought the Swissair pilots have got the best paycheck on this Continent.
: http://www.pprune.org/ubb/NonCGI/confused.gif:

You're quite unlucky indeed about those Swissair shares: the other day they lost 5% of their value in a few hours (when the Belgian guv' said it would sue Swissair for breaking their agreement). After all, I wouldn't be so sure it will lead to nothing. It's not a question of "who's right or not", it's also a question of putting pressure and trying to save the ship during the storm. My bet is that they'll find an out-of-court agreement.

cart tart 1
6th Jul 2001, 11:44
By the way Hunter its DUTROUX

Hunter58
6th Jul 2001, 20:39
Strato

Well, the company learns the hard way. And it's not the best paycheck on the continent, but certainly better than a lot of other's. I just get slightly upset if some totally unqualified politician starts throwing dirt.

Cart

DuTrou or Dutroux, what's the matter, the message is important, no?

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There's nothing like a three-holer...