Commission Criticizes Swissair Management



ZURICH, Switzerland - The leadership of the now defunct Swiss flag carrier Swissair made serious mistakes prior to the airline's collapse, but it is unclear whether this will have any legal consequences, an official report said Friday.


In a long-awaited 3,300 page report, the management consultancy firm Ernst & Young said the sudden grounding of the carrier on Oct. 2, 2001 — leaving thousands of passengers stranded — was unnecessary because Swissair had 123 million Swiss francs (then worth $76.9 million) at its disposal, and not just the 14.5 million francs it claimed.

Swissair's parent company SAirGroup was heavily indebted at the end of 2000. But the company's accounting practices masked the gravity of the financial crisis, the report said. It criticized Swissair's board and its auditors for being negligent.

It also said that Swissair, by taking sizable stakes in troubled European carriers, failed to comply with its own strategy calling for minority holdings of 10 percent to 30 percent.

The law firm overseeing Swissair's liquidation, Wenger Plattner, said the report would be studied in depth before any decision was taken on possible legal action against Swissair's former management. A decision would not be made until the second half of the year, it said.

Swissair was long a symbol of reliability and quality. After its abrupt demise, the Swiss government and big banks were forced to inject billions of dollars into a new airline, called Swiss.

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Swissair grounding could have been avoided

swissinfo January 24, 2003 12:32 PM




The Swissair fleet was grounded on October 2, 2001 (Keystone Archive)
The grounding of the Swissair fleet on October 2, 2001, could have been avoided had the management kept a proper grip on the carrier’s finances.

In a damning indictment, a new report says management incompetence and a lack of aviation experience brought down Switzerland’s national airline.




Ernst & Young's Ancillo Canepa was highly critical of the situation in general.

"When such huge amounts [of money] are involved, you rarely see such a debarcle," he told swissinfo.

Few Swiss will forget the national humiliation felt on October 2 and 3, 2001, when pictures of thousands of stranded Swissair passengers were beamed around the world.

Airline bosses blamed the fallout from September 11 for pushing Swissair over the edge. But an Ernst & Young inquiry into the debacle – made public on Friday – maintains that the cash was there to keep the airline flying, at least temporarily.

The report contradicts the version of the bankrupt SAirGroup –Swissair’s parent company – which blamed the grounding on a lack of liquidity, saying it only had SFr14.5 million ($10.6 million) in its coffers.

Ernst & Young says Swissair actually had a total of SFr50 million at its disposal on the morning of October 2. It adds that a further SFr73 million could have been tapped had it not been for “administrative inadequacies”.

“The liquidity issue alone would not have mandated the grounding of flight operations, at least not on October 2, 2001,” said the report.

The report added that just before the filing for debt-recontruction at the end of September 2001, payments of about SFr150 miliion were ordered and carried out, which were not essential to maintain business operations. But the report does not make clear to whom the payments were made.

More at:

http://www.swissinfo.org/sen/Swissinfo.html?siteSect=111&sid=1586927