sndp
Posts: 534
Joined: Fri Feb 18, 2000 6:07 pm

SAir Out Of Money Next Year

Mon Dec 18, 2000 6:22 pm

According to an article in the Belgian newspaper De Morgen this morning, the SAir group will run out of money next year due to the high losses in the airlines it owns (Swissair, Sabena, Crossair, Air Litoral, AOM, ...). Swissair plans to sell real estate and rent it back in order to generate cash. In an article in the Belgian newspaper De Standaard Eric Honegger of Swissair confirmed that not one part of SAir, either an airline or related business, will be sold in the near future.
sndp
 
gerardo
Posts: 3372
Joined: Sun May 21, 2000 6:22 pm

RE: SAir Out Of Money Next Year

Mon Dec 18, 2000 7:08 pm

"Running out of money" is a bit exagerated. The predicted losses are said to be CHF 300mio in 2001. The sell of real estate will generate cash of about CHF 400mio (at least they hope so).

The capital base of SAirGroup however is lots more than CHF 300mio.

Regards
Gerardo
dominguez(dash)online(dot)ch ... Pushing the limits of my equipment
 
ZRH
Posts: 4371
Joined: Tue Nov 16, 1999 11:32 pm

RE: SAir Out Of Money Next Year

Mon Dec 18, 2000 8:25 pm

As Gerardo said, the capital base is quite healthy. They want to generate cash because of the expected losses of the (three) french airlines (AOM, Air Liberté and Littoral; to be merged) and Sabena and to be able to invest (perhaps) into MAS and Turkish.
 
avion
Posts: 2126
Joined: Tue May 18, 1999 1:28 am

RE: SAir Out Of Money Next Year

Mon Dec 18, 2000 8:36 pm

Well my advice for them is that they should sell of Air Liberte quickly before it pulls them into the drain. Also the Sabena takeover was a complete failure.

Avion
 
First Class
Posts: 93
Joined: Wed Jan 19, 2000 3:46 pm

RE: SAir Out Of Money Next Year

Mon Dec 18, 2000 10:08 pm

The SN takeover wasn't at all a failure. The strategy is interesting and promising.
SR and SN have virtually merged and the Frech and Italian carriers are also on the way to merge.
You can't expect brilliant results during such mergers.

Cheers, Hp
 
sndp
Posts: 534
Joined: Fri Feb 18, 2000 6:07 pm

RE: SAir Out Of Money Next Year

Mon Dec 18, 2000 10:21 pm

I agree with First Class, the SN take over is not at all a faillure. It is sad to see the losses SN is making at the moment, but the external audit now should bring some clarification in the mùoney flows from SR to SN. SR benefits from SN and all the other mergers. You will see the French airlines taking over Airbusses instead of Boeings so SR Technics can maintaine these aircraft which means more money for SR. Hopefully, SR is as smart for the Fench airlines and SN to make them also profitable. The SAir Group is establishing a good basis for excellent results once all the cooperations are fully established. They are doing a good job, believe me.
sndp
 
Guest

RE: SAir Out Of Money Next Year

Mon Dec 18, 2000 10:55 pm

Actually, Sabena's losses have intensivised substantially over the last three years - especially when you take aircraft sales (listed as 'extraordinary items') out of the accounts.

SAir has, apparently, been trying to create its own critical mass 'in house' rather than simply through alliances (even Qualiflyer). Their acquisition of Air Liberte and AOM raised a lot of eyebrows as BA was badly burnt by the former. Regrettably, the French and Belgian carriers are just too entrenched in 'their' way of doing things to allow SAir do do all that it needs to do to cut costs and make the group successful.

I see everyone forgot their interest in South African Airways as well - another carrier with more than its share of financial woes!

If the group tries to buy itself out of trouble by acquiring investments in more troubled carriers (Turkish and MAS) then I really don't see them making it to 2003, let alone the end of the decade.

A great pity, because Swissair is a nice little airline.
 
SR3496
Posts: 774
Joined: Sat May 06, 2000 8:21 pm

RE: SAir Out Of Money Next Year

Tue Dec 19, 2000 1:20 am

Well, I've heard that they'll sell some % of GateGourmet. But I really don't know if this is true.
 
avion
Posts: 2126
Joined: Tue May 18, 1999 1:28 am

RE: SAir Out Of Money Next Year

Tue Dec 19, 2000 1:53 am

I can only hope they pull the emergency brake and immediately sell of Air Liberte.

Avion
 
avion
Posts: 2126
Joined: Tue May 18, 1999 1:28 am

RE: SAir Out Of Money Next Year

Tue Dec 19, 2000 2:32 am

Well i hope they realise what huge mistakes they are making.

Also not that Swissair and Crossair always brake about even. The airlines that make the big losses are Sabena and Air Liberte.

Avion
 
sabenapilot
Posts: 2442
Joined: Sat Feb 26, 2000 6:18 pm

RE: SAir Out Of Money Next Year

Tue Dec 19, 2000 3:48 am

May I point to the fact that the losses at SN are almost fully to be blaimed on SR!

Why?
SR wants to buy the remaining 50.1% of SN shares as cheep as possible, so SR is trying to give the impression to the Belgian government that SN is virtually bankrupt.
In order to do that they are draining all interesting passengers away into their network asap.

Some SR tricks to push SN into the red:
Sabena in feeding thousands of pax in the SR network every day. All flights to Asia for instance are flown by Swissair (except Tokyo), but carry a hole bunch of SN-pax.
No surprise that the SR netwok is doing pritty good...
SR says this is a normal thing to do in an alliance, since only a shared flight is lucrative and a transfer to Asia via Zurich is geografically more logical.
I can agree with this, but then why are there no Swiss travelling to North America via Brussels?
For instance, LAX (and many others) are all via Zurich i.s.o. Brussels; where's the geografical logic?
There isn't any!
The only logical thing in all this is the constant drain from SN to SR.

I can say this not only on behalf of myself:
We at Sabena have had about enough from those Swiss with their annual refom plans and their nice words on our alliance. They don't see it as an alliance at all, they see us as a simple feeder airline for their intercontinental network. Only Africa hasn't been taken away yet, probably because they fear they would get lost out there in the jungle  
I don't know if Zurich still knows this, but the reality on the SN-SR alliance however is that SR is fully dependent on SN since Switserland is not part of the EU. They stepped into SN exactly to avoid being completely marginalised in their Swiss enclave, fully encircled by the EU. It is time they treat us and SN with the respect we deserve...
We are not the unprofitable part of the alliance, we are the legal core of that alliance! I thank you.
 
avion
Posts: 2126
Joined: Tue May 18, 1999 1:28 am

RE: SAir Out Of Money Next Year

Tue Dec 19, 2000 3:56 am

I must say that 4 A321s ZRH-BRU is not alot. That is all that SR gets from SN.

Avion
 
SR3496
Posts: 774
Joined: Sat May 06, 2000 8:21 pm

RE: SAir Out Of Money Next Year

Tue Dec 19, 2000 4:01 am

Hey Avion, aren't there 7 flights between ZRH and BRU at the moment? (6 with A32S and 1 with ARJ). Correct me if I'm wrong.
 
avion
Posts: 2126
Joined: Tue May 18, 1999 1:28 am

RE: SAir Out Of Money Next Year

Tue Dec 19, 2000 4:07 am

Yes i think SR could alone justify two A320s and one ARJ on its own without SN. So i only count 4.

Avion
 
sabenapilot
Posts: 2442
Joined: Sat Feb 26, 2000 6:18 pm

RE: SAir Out Of Money Next Year

Tue Dec 19, 2000 4:40 am

I must also say that often the morning and evening flight is not a A321, but actually a A330.
I didn't know so many people had to be in Zurich during the day....
 
gerardo
Posts: 3372
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RE: SAir Out Of Money Next Year

Tue Dec 19, 2000 6:08 am

If I would work for Sabena, I would probably say the same as Sabenapilot. But then again, I live nearby ZRH and so I get only the "Swiss" news, Belgians perhaps only get to see the "Belgian" news.

In my opinion, Swissair and Sabena really are the core of this alliance, no doubt at all. Sabena was not doing very well a few years ago, and what I read in many discussion forums is, that Sabena has improved a lot in the last few years. Would this have been possible without SR? I don't know.

I still hope to see a strong SN/SR airline in the near future, perhaps with some strong feeders in France and Italy.

Regards - Gerardo

Webmaster/Moderator of:
Impressions at ZRH
Airbus Forum
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dominguez(dash)online(dot)ch ... Pushing the limits of my equipment
 
First Class
Posts: 93
Joined: Wed Jan 19, 2000 3:46 pm

To Sabenapilot

Tue Dec 19, 2000 7:44 pm

Some clarifications to Sabenapilot:

1. SN never had a strong Asia presence. NRT was their only destination. There is absolutely no pax drain to ZRH from SN in this respect

2. SN always used to be a strong African and European carrier. These positions were strengthened after the arrival of SR.

3. It is of no use to build up new markets (i.e. LAX, Asia, South Atlantic) where one of the partners is strong and has a good reputation and there is a lack of additional traffic to justify more flights.

4. You always have to consider the hub functions etc.

and after all, you should be a bit more optimistic and also face the reality that smaller carriers either work together or will be subordinated to the big guys.

Cheers!
 
sabenapilot
Posts: 2442
Joined: Sat Feb 26, 2000 6:18 pm

RE: SAir Out Of Money Next Year

Wed Dec 20, 2000 3:00 am

First class,
believe me, your clarifications are very well known to the people working for SN.
They are exactly the same as those given to us by SR...

 
ZRH
Posts: 4371
Joined: Tue Nov 16, 1999 11:32 pm

Sabenapilot

Wed Dec 20, 2000 4:06 am

Politically SR is not depending on SN's EU membership. Switzerland and the EU have signed a bilateral contract which gives Swiss airlines the same rights in the EU. By the way this is the only possibility for SAirGroup to take over the majority of SN.
 
LJ
Posts: 4103
Joined: Wed Nov 17, 1999 8:28 pm

RE: SAir Out Of Money Next Year

Wed Dec 20, 2000 4:29 am

ZRH, you're right that Switzerland and the EU do have an agreement, but wasn't this deal postponed? In any case, SAir Groups involvement in SN was (or mabye still is) driven by the fact they needed a hub in the EU.

regards
Laurens Janssen
 
sabenapilot
Posts: 2442
Joined: Sat Feb 26, 2000 6:18 pm

RE: SAir Out Of Money Next Year

Tue Dec 26, 2000 4:52 am

Hi ZRH-
You're a bit wrong on that last remark of you...
The contract between the EU and Switserland is on a kind of trial basis only with a lot of rules.
Basically it means there are certain conditions which have to be met by SR in order to benefit from it. If these rules are broken, the deal can be suspended immediately.
One is the rules is that if SR takes the mayority in a EU carrier, they may not make any changes to that carrier's network in favour of their own network.
Maybe you haven't seen this yet, but SR recently broke this rule by pushing SN (via the Blue Sky reform plan) to scrap the flights to Johannesburg. Of course SR immediately introduced a code share flight Brussels-Zurich-Johannesburg, thus draining about 100 pax a day from Sn to SR's network!
The BeCA (Belgian Cockpit Association, the union of Sabena pilots that is) will now try to push the Belgian government to take action in the European Parliament.
Note that if this happens, it might be a huge disaster to SR (and also SN?)...
Anyway, we all hope it will not have to come to this,
but it seems SR has pushed its luck somewhat too far this time.
 
Guest

RE: SAir Out Of Money Next Year

Tue Dec 26, 2000 9:37 am

Whats the problem in France? Why havent AOM and Air Liberte been successfully integrated already...Union troubles, management intransigence...

They've been planning on putting these two carriers together for a long time..whats the problem? Combine their slots, rationalize their fleets around A340, DC-10, and MD-80....and create a true connecting hub at CDG to rival Air France. Add Air Littoral as Air Liberte Express, a FF program linked to Swissair, Sabena, LOT, TAP, and Turkish, and it should start taking shape...
 
ZRH
Posts: 4371
Joined: Tue Nov 16, 1999 11:32 pm

RE: Sabenapilot

Tue Dec 26, 2000 9:58 am

Sabenapilot: You are not right. These contracts are seven bilateral contracts between the EU and Switzerland. One of them is about traffic (land and air). They are not on trial basis an can not be suspended at once. It won't be possible to suspend only one contract (e.g. air and land traffic) without suspending all other 6 contracts (working, trading and others). So it has nothing to do with Swissair. The only thing is, when the contracts will be ratified (probably July next year) SR can act almost like an EU airline and the EU airlines in Switzerland like in EU countries.
I have to know it because we had a referendum (we had to vote) about it.
 
SR3496
Posts: 774
Joined: Sat May 06, 2000 8:21 pm

RE: SAir Out Of Money Next Year

Tue Dec 26, 2000 8:35 pm

Actually the Swiss airlines will get ALL the rights an EU airline already has. This mean also to fly within EU countries. But not all these rigths at one moment, they are introduced within the next 2 or 3 years after the contract has been ratified by all EU countries.
 
Guest

RE: SAir Out Of Money Next Year

Tue Dec 26, 2000 11:13 pm

Sabenapilot - you've forgotten (or maybe are not aware) of some of the following ways in which SAir makes money out of SN:

1) All of SN's aircraft are leased in from/through SAir group companies
2) Pax reservations are through SAir's system - SAir gets money every time a PNR is accessed
3) The maintenance on the Airbuses are generally carried out by SAir - at commercial rates - whilst Sabena Technics has to provide services to SAir at cost. This means that Sabena actually pays more to have its aircraft maintained in BRU than it costs them in direct terms!
4) All catering is provided by or through Gate Gourmet, an SAir company
5) SAir still intends to expatriate Belgian crews in an effort to reduce costs (and especially social costs) - employing them through an SAir company and leasing them to the operating company (SN or DT).
6) SN has to use Swissport for its handling wherever possible - and third party contracts are provided through SAir.
 
gerardo
Posts: 3372
Joined: Sun May 21, 2000 6:22 pm

RE: SAir Out Of Money Next Year

Wed Dec 27, 2000 6:22 am

About the French airlines:

SAirGroup had indeed problems with the unions. SAirGroups goals were to high, the timetable too short. Now it seems, that tha plans have been changed to please everybodies wishes, also the unions.

The fleet will for sure consist of A320 and A330/A340. The DC-10 will hopefully leave the fleet, the sooner, the better. Perhaps some regional aircraft will also join the fleet.

CDG will not be the Franch hub, but Nice and Paris Orly, which are already hubs of Air Littoral and AOM.

About Sabenas situation: If my informations are right, Sabena was nearly bankrupt, when SAirGroup stepped in. OK, Sabena has to pay SAirTechnics. But where is the difference between paying SAirTechnics or somebody else? If Sabena really succeds with the turn over, then also thanks to SAirGroup.

Just my 0.02 CHF

Regards
Gerardo
dominguez(dash)online(dot)ch ... Pushing the limits of my equipment
 
ZRH
Posts: 4371
Joined: Tue Nov 16, 1999 11:32 pm

RE: SAir Out Of Money Next Year

Wed Dec 27, 2000 8:25 am

Without the money of SAirGroup, Sabena would not excist anymore in our days.

By the way to Ceilidh: Swissair pays the same prices to SRTechnics, Gate Gourmet, Flight Lease and SwissPort as Sabena does.
 
Krushny
Posts: 756
Joined: Sun Dec 24, 2000 4:22 am

RE: SAir Out Of Money Next Year

Wed Dec 27, 2000 10:25 pm

Funnily, all the gloom and doom stories about SAir that I heard lately are originated in Belgium... looks like the national pride was hurt by the takeover of SN.
 
sabenapilot
Posts: 2442
Joined: Sat Feb 26, 2000 6:18 pm

RE: SAir Out Of Money Next Year

Sat Dec 30, 2000 7:51 am

Put your Swiss glasses aside ZRH,

As a Sabena pilot, I am afraid you do not know what you are talking about when you talk about the SN-SR alliance.
You look at it as I did before I joined the company, i.e. as a very big fan of SN (or SR in your case).
However the story from the inside is one of pure financial speculation
One exemple: SR adviced SN to sell all its "slots" on fuel when the prices increased by 15%. They considered this as a clever way to quickly make some money thanks to the fuel shortage. Sadly, prices kept on going up, so by the end of the year SN ended up buying fuel at prices 35% higher then needed if they would have kept their fuel slots.
Now SR is saying that we have lost too much money this year, but it is purely to blaim on this stupid specuation which was adviced to us by Zurich's financial department.
Best of all: SR did not sell off its proper fuel slots!!!
How do you think we feel about this kind of "solidarity"???
SR officially tells us they wanted to spread the risk....  
Did you know that in the event of a beneficial transaction, the net result was actually to be booked on the accounts of SR since it would be considered as extra income for SN thanks to SR, but now that it turned out to be a wrong thing to do, this transaction must be fully entered on SN's flight operations accounts which is kept independant from SR.
Note the difference: profits go to SR, losses stay with SN.


Also,
The SN-SR deal is based on one of those 7 contracts you talked about and remember that not all of them are completely ratified by our government although they are already implemented (on a kind of trial basis).
Now that SR is clearly abusing the contents of those contracts, why should the bigggest SN shareholder (the Belgian State, who will have to pay as well for all of SR's mistakes) expedite the ratification of those contracts?
 
LOT767-300ER
Posts: 8526
Joined: Mon Jan 01, 2001 12:57 pm

RE: SAir Out Of Money Next Year

Sat Dec 30, 2000 8:08 am

Well i hope Swissair will sell their stock in LOT back to them!
 
ZRH
Posts: 4371
Joined: Tue Nov 16, 1999 11:32 pm

RE: SAir Out Of Money Next Year

Sat Dec 30, 2000 9:07 am

Sabenapilot: Belgian parliament will ratify these contracts when all other EU countries do. They have to, because the EU countries also have big advantages of them. If only one country does not ratify, the contracts would not become affective. Remember they have to ratify all seven or none. It won't be possible not to ratify only one contract (e.g. the air and ground transport contract).
Your story that losses go to SN and profits to SR is an old fairy tale and nonsense told by some people. SN has a lot of home-made problems like strikes and the high taxes. Till now SAirGroup only had losses from its stakes of Sabena and no advantages at all. Perhaps it really would be better to sell them all, but nobody knows who would buy them.
 
sabenapilot
Posts: 2442
Joined: Sat Feb 26, 2000 6:18 pm

RE: SAir Out Of Money Next Year

Sat Dec 30, 2000 9:22 am

Did you know their is a clause in the contract between the Belgian state and SR that all shares can/must be taken back by the Belgian State at the price SR got them if one party wants this??? This clause is unlimited in time, so even valid in 50 years...
In other words: if Belgium ever wants SN back, we can buy it back.
but also:
if SR wants to get rid of SN, the Belgian state must buy it back.
Fact is that SR never mentions this, so it must be that after all, we are not that unattractive to them...
This is because SR is making more money our of SN then it is loosing on us.

 
ZRH
Posts: 4371
Joined: Tue Nov 16, 1999 11:32 pm

RE: SAir Out Of Money Next Year

Sat Dec 30, 2000 9:45 am

I think you don't know how many hundreds of millions of francs SAir has put into SN. There is no end to it.