The new chairman and chief executive of the SAirGroup, Mario Corti, says the group urgently needs to change its strategy, after making losses of nearly SFr3 billion ($1.73 billion) in 2000 - the worst year in the company's history.This content was published on April 2, 2001 - 13:09
Corti told a news conference in Zurich that the group's expansion strategy of buying stakes in foreign airlines had failed. SAirGroup made a net loss of SFr2.885 billion ($1.67 billion) in 2000.
The company on Monday blamed the group's investments in Belgian, French and German airlines for most of the huge losses.
Corti said a consortium of four banks, including Switzerland's UBS and Credit Suisse, was being put together to provide extra capital.
He said that SAirGroup would no longer support the French airline Air Littoral - in which it has a controlling stake - and that the group wanted to sell it off.
He added that SAirGroup would take a decision on the future of its controlling stakes in two other French airlines, AOM and Air Liberté, at its annual shareholders' meeting on April 25.
Corti said the French airlines were causing a "cash drain" of SFr80 million a month. "This is no way acceptable. Immediate action is required," he commented
A decision on the future of the group's 49.5 per cent stake in the Belgian airline Sabena is to be taken this summer, Corti said. A new strategic plan is expected to be finalised by the end of this month.
SAirGroup intends to sell nearly half of its SFr1.5 billion investment in real estate and is in advanced stage of negotiations for the sale of its Swissôtel hotel chain.
The group said it was also going to realign its overall business strategy to lay the ground to "substantially enhance" its revenue and earnings performance.
It added that its most urgent concern was to reduce the risks to which the group's airline investments were currently exposed as "quickly and substantially" as possible.
The group's descent from flagship firm to financial fiasco has been headline news since January, when the chief executive, Philippe Bruggisser, departed abruptly.
Sabena suffered losses of SFr497 million last year. AOM, Air Liberté and Air Littoral made a combined loss of SFr344 million, while Germany's LTU was SFr340.48 million in the red.
On a more positive note, two other airlines in which SAirGroup has a stake - LOT Polish Airlines and South African Airways - recorded black ink results last year.
Swissair had an earnings before interest and taxes (EBIT) loss of SFr195 million, a statement said, noting that fuel costs alone had increased sharply to SFr270 million, 56 per cent higher than the previous year.
Losses made by the group's airline investments, value adjustments to loans and provisions established for restructuring costs, asset impairments and contractual obligations had a combined negative impact of SFr3.725 billion on the net result.
In stark contrast to the airline business, the airline-related businesses of the group reported encouraging results. SAirLogistics posted a record operating revenue of SFr1.712 billion, 27 per cent higher than the previous year, while its EBIT reached SFr99 million.
Corti, who is chief financial officer of food giant Nestlé, took over the helm of the troubled SAirGroup two weeks ago. He is the only member of the SAirGroup board not to have stepped down following the board's mass resignation last month.
Critics have accused the board of abdicating its responsibilities by leaving and there has been an outcry at news that the former chairman, Eric Honegger, would receive a SFr5 million payoff.
Analysts expect the SAirGroup will have to drop its aim of heading an alliance of airlines and eventually join either the "oneworld" alliance led by American Airlines and British Airways or Lufthansa's Star alliance.
Corti has made it clear he wants to drop the unpopular SAirGroup name and return to the more universally recognised Swissair.
SAirGroup made a profit of SFr273 million in 1999.
swissinfo with agencies