A loss yeah, but $1.7 BILLION!!! I can't believe it myself! Oh dear!
Troubled SAirGroup Posts Deep Losses
By Ted Gogoll
02-Apr-2001 10:17 AM U.S. EDT
Years of aggressive expansion are continuing to haunt SAirGroup as the Swissair parent reveals a loss of $1.7 billion for last year - but the group says a realignment of its strategy should turn the tide.
Last year "was the worst year in the history of Swissair/SAirGroup," the group said in a statement, citing major losses incurred by airline investments, value adjustments to loans, compounded by rising fuel costs and surplus capacity. The group bought minority stakes in over 10 European airlines to compete with Lufthansa, British Airways and Air France.
"The group intends to realign its overall business strategy to lay a sound foundation on which to substantially enhance its revenue and earnings performance," the group said.
A management shuffle began in January when SAirGroup Chief Executive Philippe Bruggisser stepped down - a move foreshadowing the group's deep financial problems. Then two weeks ago the group stepped up to renew confidence and turn around its unprofitable Swissair unit by naming Mario Corti - former CFO of consumer food giant Nestle - its new chairman and CEO. A week earlier, Moritz Suter, head of the group's airlines division, stepped down after only weeks on the job, citing his "inability to tackle the task" of turning around the group's money-losing airlines under the current management structure. Suter is the third person to hold that position in less than a year.
Losses abound around the group. Swissair had a loss of $112 million, with its fuel costs alone increasing sharply to $155 million, up 56% year-over-year. Belgium carrier Sabena, which the group holds a 49.5% stake, had losses of $284 million. Combined losses at France's AOM/Air Liberte and Air Littoral were $344 million and $196 million losses were posted at Germany's LTU.
The group had a profit of $165 million in 1999.
Corti is reportedly planning to announce a cash injection of at least $590 million from a banking consortium headed by Credit Suisse to prop up the ailing group.