SAirGroup faces stormy AGM
The management of the Swiss aviation conglomerate, SAirGroup, faces a stormy annual general meeting on Wednesday with shareholders angry about massive losses, bad foreign investments and several months of managerial turbulence.
The new chairman and chief executive, Mario Corti, is also expected to unveil further details at the meeting in Zurich of his plans to turn the company around. As many as 11,000 people are expected to attend the AGM, the largest in Swiss corporate history.
The company, rarely out of the headlines since the beginning of the year, has seen its share price drop by nearly 60 per cent since early January.
The SAirGroup, the parent company of Swissair, has promised shareholders a new beginning after unveiling losses of almost SFr2.9 billion ($1.7 billion). But analysts say the new management under Corti will have a hard time persuading investors that the corner has been turned.
Shareholders may call for an independent audit of the company's finances.
Corti is expected to face questions about what he plans to do with SAirGroup's 49 per cent stakes in loss-making foreign carriers, including Belgium's Sabena and two French airlines, AOM and Air Liberté. A decision on Sabena is expected in summer.
Unions in France staged strikes on Tuesday, serving notice they would not accept an SAirGroup withdrawal. Corti has already announced the company is pulling out of a third French airline, Air Littoral.
All members of the board, with the exception of Corti, resigned in March after taking responsibility for the failed expansion policy blamed for the group's huge losses.
Corti is likely to be questioned about the pay-off agreed with the last chairman, Eric Honegger, who is stepping down on Wednesday as part of the board's mass resignation. A row over a reported SFr5 million handout was defused on Tuesday when Honegger agreed to settle for considerably less.
Other departing directors, however, are said to have lucrative five-year contracts which have to be honoured. One of them is the former Swissair chief executive, Philippe Bruggisser, who has been widely blamed for over-stretching SAirGroup's finances with loss-making foreign acquisitions.
High profile dismissals
The group has been hit by a series of highly public executive resignations and dismissals this year, including Bruggisser's and the man appointed to take over the group's airline operations, Moritz Suter, who walked out after just 44 days in the job.
Corti's determination to rid SAirGroup of its unprofitable ventures and return to core airline business was underlined with Monday's announcement that the group's hotel arm, Swissôtel, had been sold to the Singapore-based Raffles Group.
The AGM will also be closely watched by analysts and banks. A consortium of banks is currently discussing ways to improve the group's financial base.
Adding to SAirGroup's headaches are demands by the government and Zurich's cantonal authority, both three per cent stakeholders in the company, for a special audit into last year's losses. They have also threatened legal action against the outgoing board.
Corti is well aware, analysts say, that after several months of disastrous publicity, he needs to persuade shareholders and markets that he is taking the right measures to restore public confidence in the group and its tarnished reputation.
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