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SAirGroup boss under scrutiny over Swissair

For now, it's business as usual at Swissair


Shares in the SAirGroup have taken another tumble amid market disappointment that Wednesday's board meeting failed to produce an expected announcement on the future of its troubled flagship carrier, Swissair.

SAirGroup issued a statement after the meeting saying that no strategic decisions had been taken.

There had been speculation that SAirGroup was ready to sell part of Swissair to a major competitor. But the statement squashed these rumours saying that such a sale was not up for discussion.

Media reports had concentrated on rumours that American Airlines, British Airways or Lufthansa may take a stake in the carrier.

Some analysts interpret Wednesday's meeting as a victory for SAirGroup's chief executive, Philippe Bruggisser. He has followed a strategy of preserving Swissair's independence by keeping the airline out of major alliances.

At the same time, he has bought into a string of smaller European companies such as the Belgian carrier, Sabena, in a bid to compete with the bigger players. Bruggisser has also tried to beef up airline-related businesses such as hotels, catering and aircraft maintenance.

But losses at Sabena and restructuring costs at three French airline units are eroding margins. The soaring cost of fuel and the strength of the dollar are also damaging the group's position.

But Bruggisser's success in fending off pressure for a major change in corporate strategy may be short-lived if he cannot return Swissair to profit.

He may at least be forced to abandon investments in some of the airline's weaker partners in the 11-member Qualiflyer group.

Some believe the hotel or catering part of SAirGroup's business could be sold off to finance Swissair. But most analysts think Bruggisser will eventually have to seek a closer relationship with one of the bigger airline alliances such as One World.

by Michael Hollingdale

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