Word: swissair
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...Swissair seems ready to try another tack. Last month, new (since March) CEO Mario Corti publicly repudiated Swissair's costly expansion strategy, saying the "fragmentation of the group created a difficult-to-manage structure, often at the expense of the customer and causing dilution of the core Swissair brand." He vowed to slash the company's $4.4 billion debt by $1.7 billion over the next 18 months...
...bailing out of another regional French carrier, AOM/Air Liberté, which was also generating millions of losses. "The exit from France should further reassure our stakeholders that we are committed to resolving loss-making minority airline participation issues and to fully focus on our core airline business, Swissair and Crossair," Corti said...
...much for France. Then Corti moved on to Belgium, where he scored his biggest victory in last month's agreement with the Belgian government on funding for Sabena, the national airline that has had only one profitable year in its 40-year history. As with the French holdings, Swissair took a minority stake, 49.5%, in Sabena because as a non-E.U. company it was initially barred from having majority control. But it had agreed in January to raise its stake to 85% of Sabena, which posted losses last year of $307 million. Now Swissair is freed from that obligation...
...Though Swissair insists the payments it is making to get out of the three airline deals were already covered by provisions in the company's reports, analysts note that the firm remains a minority shareholder of Sabena and could be affected if the Belgian airline's recently announced restructuring plans are not successful. "Corti has certainly done well in managing to get out of obligations in France and Belgium," said Andrew Light, an airline analyst at Schroder Salomon Smith Barney in London. "He's bought himself some time...
...Along with bailing out of airline partnerships, Swissair has been selling non-core assets in hopes of lightening its debt load. Swissair ended its 10% stake in Austrian Airlines and sold its hotel division Swiss?tel to the Raffles group for $247 million. Corti said he expects to raise a further $1 billion by selling aircraft and leasing them back. But he also noted that the debt had fallen just slightly, so it was still around $4.4 billion at the end of June (its equity in December was only about $720 million...