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Crossing Continents Wednesday, 28 November, 2001, 17:31 GMT
A nation in shock: Swissair crisis
Swissair
Quiet days for Swissair
For years, Switzerland has prided itself on having one of the most prestigious airlines in the world. But the humiliating demise of Swissair has left the nation stunned. The irony is that this tragedy could have been predicted. Henry Bonsu reports from Zurich.

 Listen to this programme in full

It is the middle of the afternoon at Zurich international airport, and my interviewee and I have suddenly become the centre of attention. Not that we are doing anything outrageous.

What is provoking interest is my producer's decision to photograph us standing next to a giant Swissair logo. In these quiet days it is enough to excite the staff at check-in, who seem proud of our desire to be associated with their airline.

The problem for Swissair was that they wanted to be a global player, but they are too small

Sepp Moser

But my smile is double edged. For I have just been hearing that Swissair's collapse was less to do with 11 September and the international aviation crisis, than with corporate arrogance and mismanagement on a grand scale.

Problems

"The problem for Swissair was that they wanted to be a global player, but they are too small," claims Sepp Moser, an aviation analyst.

Sepp Moser
Sepp Moser

"Things got really bad from about 1995 when they began buying up bankrupt airlines all over Europe, but the fact that this company was in bad shape was not acknowledged, and the necessary decisions were not taken."

This so-called "hunter strategy" was rooted, he says, in the arrogance of a company desperate to punch above its weight on the international scene.

When he sounded the alarm bells in July last year, Moser was threatened with lawsuits for his trouble.

Grounding of the fleets

So until the grounding of the entire Swissair fleet on 2 October, the Swiss public had no idea their national airline was on the verge of bankruptcy.

Pilot Christian Frauenfelder calls it "Switzerland's own Twin Towers", a suggestion that amazed me. When he heard the news, he was 30,000 feet over the Urals, flying from Tokyo to Zurich, and he has struggled since to come to terms with the reality.

Swissair pilot
Swissair pilot, Christian Frauenfelder

"You have difficulty sleeping. When you're talking with friends, you have tears in your eyes. Swissair is part of our life. It's family, and it's tough to see your family dying."

Pilots even had to carry cash to buy aviation fuel, and dry clean their own uniform. "It was like we were a bush airline."

It was a phrase I heard a lot while I was in Zurich, and I assumed that by "bush" they meant "Third World". It was always said without irony even though they were talking to an African journalist, and it was probably their pain that prevented me feeling a natural sense of "schadenfreude".

Uncertain futures

The sight of 1000s of Swiss nationals stranded in airports over the world stirred a people, unaccustomed to large-scale demonstrations, into action.

In October both the financial and political capitals of Zurich and Berne were besieged by up to 10,000 protestors, including many Swissair staff in full uniform.

Swissair crew
Dominique and Jorg wonder about their future

Dominique, 28 years old, who loses her dream job next month, remembers the day well. "A total stranger embraced me in the street. We were both crying, then he went on his way."

Hers was simply one of many hardship cases we heard, but more miserable still was that of Jorg. Just three years away from retirement, and now no pension to speak of after 30 years service.

To understand why this has hit the Swiss so hard, you need to appreciate why this country is special. For a start, this is a small, fairly mono-cultural society of seven million people where, in the words of Sepp Moser, "everybody knows everybody else, or is friends or even related to every body".

In a country world-famous for its banks, precision watches and cheese, but also so insular that it still refuses to join either the UN or EU, the ultimate icon here was Swissair, a flying bank. If that could collapse, was anything safe in Switzerland?

Handling the pressure

I imagined the weight on the shoulders of Swissair's Chief Executive Mario Corti must be tremendous, and I told him so, during an exclusive interview.

Mario Corti
Swissair Chief Executive Mario Corti

In post for only six months, he had spent 11 years managing Nestle's finances, when the call to his first airline job came. "Nobody else wanted to do it-a lot of people in Switzerland are fairly timid, and they didn't want to take the risk", he smiled grimly, "but I wanted to be able to look at myself in the mirror and say I had a go."

Not for nothing then have the papers dubbed him "Supermario".

The developing crisis

Swissair aeroplanes at foreign airports were recalled to Switzerland, and stranded passengers were told they would get no compensation.

Swissair in crisis
2000
July - Swissair denies it is in financial trouble

2001

Jan - Abandons policy of buying up foreign airlines
March - Appoints new chief executive Mario Corti
April - Announces huge losses, restructuring begins
June - Air Liberte goes bankrupt, Air Littoral sold
July - Agrees Sabena restructure
Sept - Declares bankruptcy
Oct - Entire fleet grounded, Crossair to take over
Nov - Swiss Govt agrees emergency cash injection

I wondered whether his decision to ground the entire fleet was a calculated gamble to force the government and banks to ride to the rescue.

Deeply damaging though the images were, says Corti, he had no choice because the biggest bank UBS simply would not come up with the funds in time.

But how did this beacon of Swiss efficiency get itself into such terrible trouble? Was it arrogance? Or was it "Filz", another omnipresent term, which literally means interwoven material, but actually stands for the kind of boardroom nepotism which some claim is endemic here.

"Perhaps the expansionist strategy should have been underpinned by raising equity rather than debt," he concedes, admitting that the Swissair debacle may have implications for the wider business environment. But Corti does not have time to dwell on the past.

Rescue efforts

The Swissair board which made such disastrous investments in Poland's LOT, and Belgium's Sabena Airways has been sacked, and Project Phoenix has until March to rescue some sort of national airline from the ashes of Swissair.

Fleet of Swissair planes
Swissair was a national icon

Swissair's 70 per cent stake in its regional subsidiary Crossair has been sold to UBS and Credit Suisse, and both regional and national government have ploughed money in to a package which amounts to nearly 2 billion.

It is clear that whatever emerges from this mess, Switzerland's new national airline will be a much slimmer affair than that of Swissair.

A nation in shock

As an outsider, looking at this amid the blitz of recent headlines, it's tempting to think that what has happened in the last two months is so devastating that Europe's richest country will be forced to question its very identity.

Swissair's collapse was preceded by the murder of 14 people in the small town of Zug, and followed by the appalling fire in the Gottard tunnel.

Then to compound it all, last weekend a Crossair Jumbolino plane from Berlin crashed into woods near Zurich airport, claiming the lives of 24 people.

Professor Madeleine Herron
Professor Madeleine Herron

Madeleine Herren, a professor of contemporary history at the University of Zurich, agrees that this terrible sequence of events has shaken the Swiss to the core.

"It's an attack against the understanding that Switzerland is very safe. What we now have is a climate of fear. Things now look dangerous. Until now the world was something outside the Swiss frontier. Suddenly it's inside. The question is whether we retreat even further into isolationism, or co-operate more with the outside world."

Also in this edition of Crossing Continents: The English language primary school programme that's causing a political row about national identity, and the restaurant where you never see your food.

A nation in shock: Swissair crisis: Thursday 29th November 2001 at 1100 on BBC Radio Four

Reporter: Henry Bonsu
Producer: Rosie Goldsmith
Editor: Maria Balinska

 WATCH/LISTEN
 ON THIS STORY
Christian Flauenfelder
Swissair pilot's reaction to the collapse of Swissair
Aviation analyst
Aviation analyst explains Swissair problems
Mario Corti
Chief Executive of Swissair looks to the future
Cabin crew
Ralph, Dominique and Jorg wonder about their futures
Madeleine Herren
Professor at Zurich University analyses impact on rest of Switzerland
See also:

01 Nov 01 | Business
25 Oct 01 | Europe
02 Oct 01 | Business
08 Oct 01 | Business
03 Oct 01 | Business
03 Oct 01 | Europe
02 Oct 01 | Business
02 Oct 01 | Business
02 Oct 01 | Business
24 Oct 01 | Europe
01 Oct 01 | Europe
09 Nov 01 | Country profiles
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