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Suter's departure hits SAirGroup shares

SAirGroup's shares dropped after Moritz Suter's unexpected resignation

(Keystone)

News that Moritz Suter has stepped down as head of SAirGroup's troubled airline knocked shares in the group lower in trading on Wednesday. The company, which owns Swissair and Crossair, has stumbled from crisis to crisis since the departure of its chief executive, Philippe Bruggisser, in January.

Shares in the airline conglomerate dropped more than two per cent on the Swiss Stock Exchange, after having traded higher earlier in the session.

Suter's departure comes as the SAirGroup redefines its strategy in an attempt to cut losses at its airline affiliates, and concentrate on its flagship carrier, Swissair, and its airline-related businesses.

Suter, the founder and head of Crossair, was appointed to lead all airline activities in January after Bruggisser resignation.

In a short statement, the SAirGroup quoted Suter as saying that he felt unable to carry out his job effectively within the SAirGroup's management structure.

Suter had reportedly faced opposition from the management of SAirGroup's various airlines. He had been planning to merge the Balair Charter airline with Crossair, while Swissair pilots feared he would also put the carrier's short-haul flights under Crossair's control.

"He met with resistance in the management and old rivalries between Swissair and Crossair re-emerged," said an SAirGroup spokesman, adding that Suter had the backing of the board.

Suter was also seen as very critical of SAirGroup's involvement in Belgium's Sabena, in which the group has a 49.5 per cent stake. SAirGroup is currently reconsidering its commitment to the loss-making Belgian carrier and may even sever its links altogether.

"He probably wanted too radical a solution - one gives up Sabena and France," said Beat Kaeser, an analyst at Darier Hentsch.

Kaeser said he doubted the board's proclaimed support of Suter was wholehearted. He said that if Suter's main problem had indeed been with other managers, the board could simply have fired his subordinates.

SAirGroup said a successor to Suter would be proposed to the board shortly and that, in the meantime, the group's prime focus would continue to be on solving problems at Sabena and among its three French affiliate airlines.

Eric Honegger, board chairman and interim chief executive of the company, said he would present details of the new strategy early next month.

"The prime goal of all our present endeavours is to have a profitable, top-quality Swissair," Honegger said.

In its last results - reported in August - SAirGroup's first-half profits for 2000 dropped to SFr3 million ($1.84 million) from SFr87 million the previous year.

Bigger losses are expected when the group reveals final numbers for 2000 on April 2.

SAirGroup is also expected to join a major global airline alliance, following the change in corporate strategy triggered by the departure of its former chief executive Philippe Bruggisser.

The group is remaining tight-lipped about any potential alliance, but analysts say it is likely to link up with the Oneworld group, which includes SAirGroup's transatlantic partner, American Airlines, as well as British Airways.

At present, the company heads the Qualiflyer alliance, which includes 11 smaller airlines, some of which are in financial difficulties.

At the end of January, SAirGroup announced it would continue with its two main pillars of airlines and airline related activities.

However, it insisted that henceforth airlines would have to make a profit on their own and could no longer rely on subsidies from the airline related services.

swissinfo with agencies


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