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Swissairs Problems - History Please?

Wed Oct 03, 2001 1:26 am

I'm saddened by Swissair's shutdown today, not only for the employees but also for airline service in general. I only flew them once (GVA - LHR) but they were top-notch (filet mignon lunch in Business Class on a 1-hr 10 minute flight). I had the impression that they were carving a niche as a full-service carrier in a watered-down world. Granted, their fares were not rock-bottom, but I always figured that there would be a market for passengers willing to pay a bit extra and really enjoy the experience. The recent events show how wrong my theorizing was. In a nutshell, could someone explain just how and when Swissair started a downward spiral? Were there signs of this 5 or ten years ago? In the decaying airline world I keep my fingers crossed that there is always room for a company that is willing to go the extra mile for passenger service. Maybe filet mignon is a thing of the past, even if we would have to use a plastic knife to slice it!
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RE: Swissairs Problems - History Please?

Wed Oct 03, 2001 5:50 am

I think they just placed their bets on the wrong horses.

However, 5 years ago or something, no one could have predicted this dramatic evolution, but those are the facts. Either you win, or you loose.

And, unfortunately, SR lost, as did all the airlines from whom they bought shares... Too bad, especially since I'm a Belgian aviation enthousiast, what makes that I'm very concerned about SN's future...

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RE: Swissairs Problems - History Please?

Wed Oct 03, 2001 6:29 am

Don't know all the detail, but previous CEO wanted to create ZRH as a SR hub-city, and feed passengers through the network to other European destinations. It bought shares in airlines such as Sabena, Air Liberte, and a couple others.
This backfired (obviously) SR is a small niche airline, they over-expanded and could not keep up with the financial losses the other carriers were making (they had a 49% stake in Sabena)
Well, we all know the result. The previous CEO (don't know his name, not Swiss, he's American) single-handedly destroyed SR, due to gross mismanagement-he's a wanted man!!
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RE: Swissairs Problems - History Please?

Wed Oct 03, 2001 6:33 am

Whoever says the aim to make SR a major carrier was unachievable was very wrong. In 1990 LH and AF were financially in deep shit. Swissair had an option to buy LH. But in the end settled for SN.

It certainly wasnt foolish. It should have been done more carefully.

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RE: Swissairs Problems - History Please?

Wed Oct 03, 2001 6:37 am

Swissair airline operations wasn't the problem. It was not a goldmine, but really not too bad. Costs were said to be high, crew wages were said to be higher than the competition avarage.

But the mother company SAir Group went into large scale economic adventures with "balloon money", and the balloon exploded.

Just last year the financial loss was close to two billion dollars! That's probably something in the region of a hundred dollars loss on every single one way ticket sold. That has nothing with airline business to do.

And that one year loss also corresponds to around a hundred thousand dollars per employee directly involved in running the airline. So you can imagine that it is not just a matter of high wages. Even if all employees had worked for free, then they would still have had a huge loss last year.

The problem was insane leadership. 99% of all 10 years old school boys could have done a far better job than the CEOs they had.

Regards, Preben Norholm
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RE: Swissairs Problems - History Please?

Thu Oct 04, 2001 6:10 pm

Preben, I agree with you about the quality of the management.
I absolutely do not want to excuse them, but just try to explain why they started this stupid strategy.
Switzerland, as a country, refused to join the European union.
Then, SR cannot benefit from the open sky policy in EUrope. And they need this to feed ZRH hub (CH is too small to have important domestic network and to have enough international travelers to feed SR network).
The only solution for SR is to attract EU passengers. And to do this, and get 5th freedom rights in EU, the decided to buy airlines in Europe. And they choose big money loosers. And what I don't understand is why more than 1 per country (AIr Europe and VOlare for Italy, AOM, Air Liberte and Air Littoral inFrance, ...)
DUring the sme time, major European airlines used the strategy of alliances (which means you do not put your money in the partners, but you increase revenu and lower costs)
SR gave the illusion of building an alliance with Qualiflyer, but in fact it was the list of the airlines where the put money.
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RE: Swissairs Problems - History Please?

Thu Oct 04, 2001 9:39 pm

Swissair screwed up in a number of ways.

They dumped Geneva as a secondary hub. The 30% of the Swiss population which consitute Geneva's market were told that they would have to fly through Zurich in order to fly anywhere else. On top of that, the Swissair shuttle service that they instituted to take this traffic is all-economy. Naturally, most of Geneva's passengers responded by giving Swissair the finger, and switched to other airlines. Swissair used to have about 30-40% of the passengers who went through Geneva, by the end of last year that number I believe fell below 10%. So Swissair permenantly pissed off a big chunk of their home population (not to mention the huge number of businesses and international organizations based in Geneva.

For example, my company, based in Geneva, has switched to Lufthansa over the past couple of years as its prefered airline.


Prior to 1995, SR had MD-80s which did the bulk of short-medium range flights. The MD-80 is not wide enough for 6-across seating, but a little wider than really needed for 5-across. The result was that 5-across economy seating was fairly roomy. In business class, SR had 4-across seating, nice big chairs and plenty of legroom. The result was an airline where the short and medium-range, intra-european service was the best in Europe, and always filled. Their long distance service was considered second to none, except perhaps Singapore Airlines.

In 1995 they bought the A320 series, and by the end of 1996, all the MD-80s had bee replaced. The A320 is just wide enough for cramped 6-across seating. In order to save money and improve yield, they installed "convertable seats" throughout the plane, which means that in business class, you just push a button, one of the seats collapses partly, and the remaining 5 seats become about 1 inch wider (Big F%&/ing deal). Legroom does not change, and if you are more than 6 foot high you feel like a pretzel, even in business class. The seats themselves, in spite of being leather-covered, feel cheap - you feel all the supports and crossmembers under your butt and behind your back.

For high volume routes, they use all-economy seating throughout the plane. The resulting high density ensures that a bunch of people will not have room to put their bags, and every single time you hear someone complaining, and saying something like "I'll never fly this airline again!".

So, in my mind, the acquisition of the A320 class planes marked a very drastic decline in seating comfort on SR.

Finally, they had the terrific idea of buying bankrupt or near bankrupt, non-competitive airlines all over Europe. They hoped to turn them around and make a killing in the process, but forgot that they bought many of these airlines in countries with militant unions and bureaucracies who had absolutely no intention to switch from nice cushy jobs to actually becoming productive.

Make no mistake, Swissair management did this to itself.

But I really feel sorry for all the employees, especially the flight crews and ground staff who have always been very courteous and professional in the approximate 1 million miles I have flown with them over the years.


PS - SA-JET, The ex-CEO you spoke about was Jeffery Katz. I met him and spoke to him for several hours when he was seated next to me on a flight (I'm sure he hated that flight  Big grin). I complained to him long and hard about all these things, as well as other things like Swissair's habit of serving weird shit for breakfast, like Leek Pancakes. He didn't seem like he heard a thing I said, coming out with BS like, " business travellers don't mind cramped all-economy seating for short flights" and a lot more.

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RE: Swissairs Problems - History Please?

Thu Oct 04, 2001 11:37 pm

Thanks for your replies. Charles, when I rode the A321 in C-class from GVA to LHR in March 1996, there was a dedicated forward cabin with fixed, not convertible, 5-across seating. Although not as commodious as 4-across MD-80, it was still pretty good, especially on the '2' side, where there is no middle. I recall that the seats were a nice design, with a good contour to the backrest, which I am sensitive to since I am thin and don't have lots of natural padding!

I am also surprised that the Swiss would neglect GVA. That region represents high society, and is used to being pampered. Even I could have told them that .... and Zurich is not even on a direct line from GVA to North America. Duh.

Jeffery Katz sounds like he needs a lesson. While we will never return to the heady days of the 1960s for premium class travel, I believe history has shown that when they skimp on the premium passenger, people leave. The excuse always is "well, they're just upgrading", which neglects the fact that in order to obtain that privelege, they were pumping revenue into the airline. I worry about AA's cutbacks in domestic First Class amenities, and it would seem like the same thing was happening at UA before Sept. 11. In the long run, I believe it will prove a mistake.

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