Ernst & Young's Ancillo
highly critical of the situation in
"When such huge amounts [of money]
are involved, you rarely see such a
debacle," 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
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
“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
the end of September 2001, payments of about SFr150
million were made, which were not essential to
maintain business operations. But the report does
not say who received the money.
It said the funds could have been used instead to
avoid the grounding of the fleet.
Former Swissair chief and board member, Mario
Corti, rejected outright
the claim that the grounding could have been
"I vehemently reject the suggestions of Ernst &
Young," he said. "On October 2 , we had around
SFr4 million in Swissair's account and SFr10 million
The inquiry also heavily
criticised Swissair’s board of directors for
their handling of the crisis.
“According to the information available to us, no
board member had solid experience in the operative
management or in monitoring an international airline
company,” said the report.
The report was also scathing of the implementation
of the “hunter strategy” – a disastrous expansion
plan under which Swissair acquired minority stakes
in other mainly loss-making airlines in Europe.
The report said there was no overall investment plan
and that the board did not have the strategy
monitored by professional risk managers. It added
that there was inadequate financial information in
place for this purpose.
Ernst & Young went on to slam the board for allowing
management to buy into airlines which were
financially unsound at excessive prices and for not
intervening when acquisition budgets were exceeded.
“During the decision-making phase of the
behaved hectically and during the implementation
phase with little diligence,” said the report.
The enquiry confirmed that the hunter strategy had
overreached itself and did not confirm to the
original plan set out, which was a moderate
investment strategy with minority investments
ranging from ten to 30 per cent.
“From the outset, the implementation of the hunter
strategy did not conform with
its conception,” noted the report.
“Investments in airline companies were acquired
which exceeded 30 per cent and which did not
fulfil or only partially
fulfilled the criteria set forth in the hunter
It was Corti's
the architect of the doomed strategy.
regret that things had gone wrong but also defended
"I always acted to the best of my knowledge and
conscience in the interests of Swissair and tried to
do my best for the company," he said.
Also criticised was the
fact that the board allegedly allowed the
SAirGroup to bypass EU
law in the acquisition of certain airline
The fact that the Swiss people voted against the
joining the European Economic Area (EEA) in 1992
left Swissair no entry into the European market.
This meant that Swissair had to make alliances with
other European airlines to maintain its competitive
position in Europe.
The carrier set itself the target of becoming the
fourth most important airline in Europe, and the
SAirGroup assumed full
financial and commercial risk for this plan.
Swissair’s financial reporting also came under
“The unconsolidated and consolidated financial
statements for 1999 and, to a much greater degree
for 2000, did not fairly present the economic and
financial situation of the
SAirGroup,” said the report.
It said that by the time
SAirGroup’s unconsolidated and consolidated
financial statements for the year 2000 were made
public in 2001, the ability of the
SAirGroup to continue as
a going concern was seriously jeopardized.
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.
All four political parties in government in
Switzerland have reacted to the report by demanding