Mismanagement Reigned

The firm of Ernst & Young, hired to look into the collapse of Swissair, has released its 3300-page report; and it is not flattering to that airline's management.

Although much passenger inconvenience accompanies any airline's shutdown, the report noted that Swissair, when it shut down on October 2, 2001, was actually sitting on ten times as much cash as it said it had -- and could have made the impact on its customers quite a bit less-severe. [The numbers cited were 123 million francs actual, vs. 14 million, as-reported at the time --ed.]

The AP says E&R noted the airline knew internally, well over a year ahead of the shutdown, that it faced a $4.5 billion Swiss Franc shortfall for the coming year. It then embarked on an orgy of acquisitions.

Additionally, the reports say Swissair's 1999 and 2000 financials "did not present the economic and financial situation of the SAirGroup correctly," which hints at possible criminal activity.

The AP quoted former Swissair CEO Philippe Bruggisser as saying, "I always acted to the best of my knowledge and tried to do my best for the company. I regret that things went wrong."

The government's replacement airline, Swiss International, is struggling to break even.

FMI: www.swiss.com