Swiss Air (1931 - 2002)

Business Class porcelain bowl: Part of the Portfolio since 2018.

Some companies are too solid to fail, and that is precisely how you know they will. Swissair, born in March 1931 from the merger of Ad Astra Aero and Balair, was by the early 1970s nicknamed the ‘Flying Bank’ – an airline so liquid and so synonymous with Swiss reliability that its balance sheet was a point of national pride and its punctuality a point of national smugness. Which is why what happened still functions, in Switzerland, as a kind of collective trauma.

The instrument of destruction had a name and a consultant’s sheen: the ‘Hunter Strategy,’ devised in the mid-1990s with the help of McKinsey. Rather than join a global alliance as a junior partner, Swissair’s parent, SAirGroup, decided to become a predator – buying stakes in a flotilla of weaker European airlines: Sabena in Belgium (49.5 per cent), the French carriers AOM and Air Liberté, Italy’s Volare, Poland’s LOT, and – museum visitors will recognise the name – Germany’s LTU (see our aviation wing, where the same airline helped bury three separate owners).

The trouble with hunting is that you can catch things that then eat you. Most of these airlines were weak for good reasons; Swissair poured in capital and guarantees, and the losses compounded across a portfolio of other people’s problems. For 2000 the group reported a record loss of some CHF 2.9 billion; the strategy’s architect, CEO Philippe Bruggisser, was dismissed in January 2001, and Mario Corti, formerly Nestlé’s finance chief, was left to run the rescue. Then came 11 September and the collapse in air travel. By the autumn SAirGroup was insolvent in everything but the official paperwork.

Then came the day itself.

On 2 October 2001, UBS declined to extend Swissair’s credit line, suppliers demanded cash, and with no money to pay for fuel and ground handling, the entire fleet was grounded – the ‘Grounding,’ capital G, as it is known in Switzerland to this day. Aircraft sat on tarmacs around the world; tens of thousands of passengers were stranded; a national emblem was, quite literally, unable to buy kerosene. SAirGroup eventually collapsed with debts of around CHF 17 billion; its creditors were told to expect, at best, about 14 per cent of what they were owed.

The Swiss establishment could not stomach a country with no flag carrier, so banks and the government funded a successor. The regional subsidiary Crossair was rebranded Swiss International Air Lines, which took over the best routes and aircraft; Swissair’s last flight landed in Zurich on 1 April 2002. Swiss was itself taken over by Lufthansa, starting in 2005 and fully by 2007 – the proud independent airline ending up, after all that, as a German subsidiary.

Justice, such as it was, took its time. In 2007 a criminal court in Bülach acquitted all 19 defendants. The liquidator’s civil claim for about CHF 280 million against 14 former executives failed too, finally dismissed by the Federal Supreme Court in 2019. Nobody, it turned out, had done anything wrong; the airline had simply ceased to exist. The nation processed its grief the Swiss way, with a feature film – Grounding – Die letzten Tage der Swissair (2006) – which became the country’s most-watched domestic film of the year.

For the museum, Swissair is the definitive specimen of a particular and recurring delusion: the belief that a pristine reputation and a bold growth strategy are a substitute for not running out of money.

The Flying Bank had the finest brand in the sky and a strategy deck to match. Neither could be exchanged for jet fuel on the morning of 2 October.

Museum note: the bowl is Business Class porcelain, still intact. It survived the Grounding in better shape than the balance sheet that paid for it.

Further reading

• Wikipedia – Swissair (ongoing)
• Historisches Lexikon der Schweiz – Swissair (ongoing)
• Swissinfo – Swissair bosses cleared over airline collapse (2007)
• Swissinfo – Swissair creditors get some cash back (2008)
• SRF – Urteil zum Swissair-Grounding: Bundesgericht entlastet ehemalige Führungskräfte (2019)
• Blick – 18 Jahre nach Grounding: frühere Swissair-Führung kommt juristisch ungeschoren davon (2019)
• Wikipedia (de) – Grounding – Die letzten Tage der Swissair (film) (2006)