Life after Swissair

Zurich-based Gate Gourmet is the world number two in airline catering Keystone

Switzerland's failed national airline Swissair may have disappeared from the skies but former Swissair Group subsidiaries are still flying high.

This content was published on March 15, 2003 - 12:54

Following a string of successful sell-offs, individual divisions of the Swissair empire are now embarking on new journeys.

From airline catering to the servicing of aircraft, from duty free retail to information technology, the former subsidiaries provide more than 50,000 jobs worldwide.

With almost 10,000 of those jobs based in Switzerland, the companies' continuing survival has helped cushion the impact of Swissair's collapse on the domestic job market.

Based just a couple of minutes' walk away from Swissair's former hub at Zurich airport, airline caterers Gate Gourmet are by far the biggest employers among the old Swissair divisions.

Despite having to shed 3,000 workers as a direct result of the September 11 terrorist attacks, the company continues to employ 25,000 people in 140 flight kitchens spread throughout more than 30 countries.

World number two

A takeover by the American investment firm TPG in December 2002 has allowed Gate Gourmet to preserve its position as the world number two in airline catering (behind Lufthansa subsidiary LSG Sky Chefs) and to look with some confidence towards the future.

"It was very hard to keep people motivated in the year between Swissair's grounding and the TPG takeover," admits Gate Gourmet's communications director Connie Voigt.

"But the important thing is that they did stay motivated," she adds. "The response of the company's management was also extraordinary when you consider that every executive member stayed with us through the downturn after September 11, through the grounding [in October 2001] and right the way up to the sale in December.

"During all that time, we were the object of the proposed takeover, so we couldn't really do anything to help the sale along other than to keep going and to keep working in the same hard manner as before, to show that we were worth the investment on the part of TGP."

Clearly the strategy worked with the American investors paying SFr1.1 billion ($830 million) in December 2002 for a majority holding in Gate Gourmet.

Sales spree

Nor has Swissair's former catering division been an exception when it comes to attracting outside investment.

A few days after the sale of Gate Gourmet, Swissair's administrators announced the successful sale of the airline's former maintenance and components division, SR Technics, to British venture capitalist firm 3i for SFr618 million.

February 2002 had already seen another British investment company, Candover, buying up Swissair's ground and cargo handling division Swissport for SFr580 million.

While in January the data technology giant EDS took over the contracts of Swissair's software and IT subsidiary Atraxis.

Then in August airport retailer Nuance was sold for SFr400 million to Luxembourg's Noel International.

Gate Gourmet, Swissport and SR Technics are even being touted as possible candidates for stock market flotation in the mid-term future.

Back at Gate Gourmet's headquarters, though, Voigt says the company is more concerned right now with the short-term problems facing just about everybody involved in the airline business.

"When almost every one of your direct customers is coming up with worse financial figures than in previous years, clearly you have to become more flexible," says Voigt.

"We're now relying a lot more on temporary staff, and we make sure that we're in constant contact with our customers so that we know about any local downturns before they are publicly announced.

War worries

"Whether we have to shed any more jobs in the short-term would depend on if there is a war in Iraq, and on how long it lasts.

"But in such a case we would hope to work closely with the unions to minimise the loss of permanent jobs."

Following the recent success of "no frills" airlines, many of whom have replaced in-flight meals with sandwiches and other snacks, Gate Gourmet is also becoming more flexible about its products.

In April, the company will start producing food for on-board sales with five of its American customers.

However, Voigt is confident that the Swiss company will continue to cater for gourmet tastes.

"In the US we are seeing a clear movement towards airlines scrapping free meals in economy class, which is why we are getting involved in on-board sales," she says.

"But in Europe and Asia I think the 'no frills' approach could be a temporary trend, practised only by low-budget airlines.

"Certainly our clients are telling us that the meal element is still an important part of the service which they provide."

swissinfo, Mark Ledsom in Zurich

Swissair subsidiaries

Swissair's administrators have now sold off most of the failed airline's former subsidiaries.
Gate Gourmet, Swissport, SR Technics and Nuance all attracted foreign investment.
Only real estate division Avireal is yet to be sold.

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Gate Gourmet

Gate Gourmet employs around 25,000 people in 31 countries, making it the largest of Swissair's former subsidiaries.
The catering firm provides 1,500 jobs in Switzerland.
Following Swissair's collapse, the Zurich-based company was sold for SFr1.1 billion ($830 million) to American investors Texas Pacific Group.

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