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Tuesday, 3 April, 2001, 09:06 GMT 10:06 UK
Swissair shares nosedive 29%
Mario Corti, SAirGroup chief
Mario Corti is turning his back on the group's disastrous expansion efforts
Shares in SAirGroup, parent of Switzerland's national carrier Swissair, plunged 29% as trading resumed on Tuesday.

The shares had been suspended on Monday at the request of the company so it could report a 2.88bn Swiss franc (1.18bn, $1.68bn) loss.

Swissair planes
SAirGroup will focus on its core businesses
The losses, which were incurred following a massive expansion push, were greater than analysts had expected.

The Group's shares had fallen 12.3% last week and 45% in the past year.

Tuesday's losses come as traders appear unconvinced that the restructuring plan announced on Monday would turn the company around.

The airline will sell off recently acquired share holdings in several European airlines, its hotel group Swissotel will be put up for sale, and its 1.5bn Swiss franc real-estate portfolio will be halved, the company said.

Swissair will concentrate on a limited number of airline and airline-related activities where it can stand apart from the competition, SAirGroup chairman and chief executive Mario Corti said.

In addition, Swissair's pilots have agreed to take a 5% pay cut this summer to assist with cost cutting efforts.

A bad year

"The sizable losses incurred by its airline investments, particularly in France, Belgium and Germany, resulted in a substantial net Group loss for the year," the company said, describing 2000 as "the worst year in the history of the Swissair/SAirGroup".

The group also blamed high fuel prices and tough competition for a shortfall in earnings.

"The earnings targets in the airline sector fell far short of objectives," SAirGroup said.

Management ousted

The group chief executive of SAirGroup, Philippe Bruggisser, resigned in January after the board of the company put the brakes on his push for expansion.

Under the charge of Mr Bruggisser, SAir Group had been buying large stakes in loss-making regional and national carriers in an effort to become a leading European Airline.

Following Mr Bruggisser's resignation, the company said it would "make no further investments or acquisitions" in the airlines sector for the time being.

In early March, Swissair boss Moritz Suter also resigned after less than two months in the job, and one week later nine of the Group's board members said they will step down.

The only remaining board member is the Group's new chief, Mr Corti.

The international credit rating agency Moody's Investors Service downgraded SAirGroup from P-3 to P-2 for its short-term debt and from A3 to Baa3 for its long term debt.

The downgrade was prompted by SAirGroup's failure to turn around the airlines it had invested in during recent months.

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See also:

12 Mar 01 | Business
SAirGroup shares nosedive
23 Jan 01 | Business
Swissair chief steps down
22 Jan 01 | Business
Sabena rescue faces EU probe
24 Sep 00 | Business
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