WORLD NEWS: Swissair hit by new
revelations

Financial Times ; 23-Aug-1999



Swissair, which last year suffered the worst crash in its
history, has been hit by revelations that a
senior official bought shares in Interactive
Flight Technologies, a small US company which
stood to benefit substantially from Swissair's
decision to equip its long-haul fleet with a controversial
in-flight gambling and entertainment
system.

In 1996, Swissair became the first big airline to
order IFT's in-flight entertainment system for
passengers to win up to Dollars 3,500 (œ2,160)
by gambling via an inter-active video screen. The Dollars 80m order was a coup for IFT, a small loss-making company with a market capitalization of less than Dollars 50m.

Karl
Laasner, the Swissair official in charge of the project,
bought 2,700 IFT shares for just under Dollars
30,000 at the end of April 1996 - shortly
before IFT issued a press release announcing
its deal with Swissair.

Over the next few
months IFT's market capitalisation more than doubled to Dollars 120m amid speculation that Australia's Qantas would follow Swissair's lead and install IFT's in-flight entertainment system on its 48 long-haul jets. (my comment: they didn’t because they used too much power)

Swissair confirmed Mr Laasner's
share transactions, which were disclosed last
week in Facts, a Swiss news magazine.

The airline conducted an internal investigation and found
that Mr Laasner had not broken any internal
rules. Mr Laasner, who has been with the
company for 38 years, told Swissair that he
bought the shares because he was convinced about the
product and not for any speculative
reasons.

IFT's entertainment system has proved a public
relations disaster for Swissair and Mr Laasner's
share dealings will add to the company's
embarrassment as it attempts to improve its
image after last year's crash off the Canadian coast, in
which 229 people lost their lives.

The
cause of the accident remains unknown and Swissair has
said there is no evidence linking IFT's in-flight
entertainment system to the loss of the aircraft.
However, there has been media speculation that a
fire could have started in wiring related to
the powerful, computer-driven in-flight
entertainment system. Tim van Beveren, a freelance
aviation journalist who is about to publish a book about
last year's crash, says that the speed with
which Swissair's novel in-flight entertainment
system was approved and installed was much
faster than normal for such prototypes.

Of the
first 80,000 passengers exposed to the new system, only
50 gambled to the Dollars 200 limit. IFT's financial problems
mounted as other airlines cancelled plans to order the system.

In 1997, IFT
reported a loss of Dollars 51m.

Last October,
following the crash of flight SR111, Swissair
switched off the IFT entertainment system on all its
aircraft as a "precautionary move" and the Swiss
civil aviation authority withdrew the system's
certification.