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S. Airgroup Assessment

ompany History
Swissair was formed by the merger of BalAir and AdAstra on March 26, 1931.
The new company had 13 aircraft, 64 employees, and flew from Zurich to 4 domestic and 14 European destinations. By early 2001 Swissair Group had 72,000 employees worldwide including 21,000 working in Switzerland. It had 75 aircraft, and served 210 destinations in 75 countries.
Table 1: Swissair/SAirGroup’s Growth 1931-2000 at a Glance

1931 1946 1970 2000
Size of fleet 13 16 35 161
Number of employees(full-time equivalent) 64 789 13,280 71,900

Number of revenue passengers 10,282 62,378 3.9 mio 19.2 mio
Number of cities served 20 15 75 218
Break-even load factor n/a n/a 49% 75%

The growth of Swissair over the seven decade period can be attributed to the Swiss emphasis on quality. From it’s very beginning, Swissair focused on maintaining safety and good service, going on to win the best airline award several times. Swissair was a pioneer among the European airlines in introducing new aircrafts and services. As early as the 1960’s the company formed alliances with other airlines, thus helping to lower the costs of aircraft maintenance. Swissair was one of the first European carriers to diversify into business fields as varied as IT to agriculture, airline ground service and catering and hotels. This helped them counter the effects of the weak home market, strong currency as well as the cyclic effects of the airline industry.

Table 2: Breakdown of EBIT by business unit (in million CHF)
1997 1998 1999 2000 2001-1H
EBIT by division
SAirLines 264 354 188 35 138
SAirServices 127 145 165 162 -6
SAirLogistics 43 33 6 99 17
SAirRelations 181 153 269 300 56
SAirGroup 43 15 95 68 -111
SAirLines investments -80 -3,256 -137
Total EBIT 658 700 643 -2,592 -43

The company had very high financial standards.                                                                                                     It had an internal ceiling of...