Swiss caution and American zeal seem as unlikely a combination as yodelling and rock music, but Swissair is certain that an American chief executive at its helm will fashion a more international outlook.

Swiss national pride undoubtedly took a knock following Swissair's decision to hand over operating control of the airline from Philippe Bruggisser to American Airlines executive Jeffrey G Katz from April. The president of Sabre Travel Information Network and former American Airlines passenger sales manager will take over as Swissair CEO in January 1998.

Swissair is also turning overseas to British Airways for new management expertise. Katz will be assisted by BA's former general manager revenue management, Ray Lyons, and its area manager Scandinavia, Finland and the Baltics, Lee Shave, who will become vice presidents of network management and of sales and customer relations respectively. The new management will continue to report to Bruggisser, president and CEO of Swissair's parent, SAirGroup.

The management changes underline Swissair's new emphasis on yield management and sales and marketing, says analyst Andrew Barker of S G Warburg, and mark 'the first time that a European airline has taken a number of senior executives from other airlines'. The move will enable Swissair to 'sharpen up the international nature of its business,' says Mike Powell of County Natwest Markets.

Although Bruggisser stresses that the appointments are 'by no means a rejection of our current management team', Powell points out that 'the implication has to be that the previous management was not doing its job sufficiently'. He sees scope for the airline to be managed more aggressively. 'Swissair has never extracted enough value across the cabin.'

The management's focus will be on meeting tough targets: an increase in load factors to 70 per cent, a reduction in unit costs, and a return on capital of 8 per cent by 1999.

Meanwhile, higher than expected losses at Sabena are expected to push Swissair to write down to zero its $207 million investment in the Belgian carrier. Sabena's 1996 net loss increased to BFr8.87 billion (US$250 million) from BFr1.66 billion in 1995, although BFr4.1 billion related to the Horizon '98 restructuring programme.

Swissair plays down any pending decision to write off its Sabena investment, stating that this would merely be an accounting mechanism allowing it to stop consolidating Sabena's losses in its results.

Swissair vice president external relations, Michel Eggenschwiler, says Swissair is confident that Sabena will break even in 1998, and quashes suggestions that Swissair will withdraw financial support. 'There is no question of our changing our engagement with Sabena at the moment.'


Source: Airline Business