The story
Founding years
On 26 March 1931, Swissair – Schweizerische Luftverkehr AG (English: Swissair – Swiss Air Transport) was founded through the fusion of the airlines Ad Astra Aero (founded in 1919) and Balair (1925). Balz Zimmermann and the Swiss aviation pioneer Walter Mittelholzer were the founding fathers. In contrast to other airlines, it did not receive support from the government, which allowed it to operate independently and focus on building a strong brand identity without relying on state funding. The name "Swissair" was the proposal of Dr Alphonse Ehinger, president of the board of directors of Balair, although "Swissair" was first deemed "un-Swiss". In the first operational year, 64 people were employed, including ten pilots, seven radio operators, and eight mechanics. Their planes offered 85 seats, and operation was maintained only from March to October. The route network had a length of 4,203 kilometres (2,612 mi).
On 17 April 1932, Swissair bought two Lockheed Orions, making them the second European airline to use American planes after the Czechoslovak operator CSA purchased a Ford Trimotor in 1930. The Orion was the fastest commercial aeroplane of its time and was put to use on the "Express Line", Zürich-Munich-Vienna. This led Lufthansa to ask Heinkel for a model that could top Orion's speed, leading to the Heinkel He 70. The first trans-Alpine route was introduced in 1933: Zürich-Milan.
For the first time in Europe, flight attendants were employed aboard the Curtiss Condor beginning in 1934. Nelly Diener, the first female flight attendant in Europe, became world-famous. She was killed after just 79 flights in a crash near Wurmlingen, Germany, on 27 July 1934. The cause of the crash was determined to be material fatigue.
In 1936, Douglas DC-2s were acquired, and London was added to the route network. In 1937, the bigger Douglas DC-3 was bought. In the same year, both founding fathers died: Walter Mittelholzer died while mountaineering in Steiermark, Austria, and Balz Zimmermann succumbed to an infectious disease.
On 27 August 1939, days before World War II broke out, the airspace over Germany and France was closed. Swissair was forced to suspend service to Amsterdam, Paris, and London. Two days later, the Swissair service was closed completely. Of 180 employees, 131 had to serve in the army. Despite the war, some routes were later reintroduced, such as Munich, Berlin, Rome, and Barcelona. In 1940, an invasion of Switzerland was feared, and Swissair moved their operations to the Magadino Plains in Ticino. Operations were suspended in August 1944, when a Swissair DC-2 was destroyed in Stuttgart during an American bombing raid.
On 30 July 1945, Swissair was able to resume commercial aviation.
Ascension
In 1947, the rise of shareholder capital to SFr20 million (equivalent to SFr95.61 million or US$105.06 million in 2021) enabled long-haul flights to New York, South Africa, and South America with Douglas DC-4s. The modern Convair 240, the first Swissair plane with a pressurised cabin, was used for short- and medium-range flights starting in late 1948. The first Swissair DC-4 flight to New York was routed via Shannon, Ireland, and Stephenville, Newfoundland, on 2 May 1947. However, it ended in Washington, D.C., due to fog at New York's LaGuardia Airport. The total elapsed time was 20 hours and 55 minutes.
The public, including the federal government, cantons, municipalities, the Swiss Federal Railways, and the Swiss postal services, took over 30.6% of the shares and enabled Swissair to get a credit of 15 million Swiss francs to purchase the airline's first two Douglas DC-6B airliners for delivery in 1951. By that act, Swissair became Switzerland's national flag carrier. The new pressurised aircraft was to replace the DC-4 on transatlantic routes.
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In 1948, the airport in Dübendorf, which had served as the base of Swissair, was relocated to Zürich-Kloten. Military aviation continued in Dübendorf. The next year, Swissair plunged into a financial crisis due to a sudden devaluation of the British pound because fares, except for traffic to the United States, were calculated in British currency. At that time, traffic to England made up 40 per cent of Swissair's revenue.
In June 1950, Walter Berchtold, manager of Swiss Federal Railways, was elected to the directorial board of Swissair and served as its director. In 1971, he created the corporate culture of Swissair. He grasped the importance of corporate image and corporate identity, and after the example of BOAC's "Speedbird", he introduced the arrow-shaped Swissair logo. Giving flight personnel a distinct uniform was also an important move. At the time, flight attendants' uniforms resembled the grey-blue ones of the Swiss Women's Army Corps, so Berchtold introduced ones in a modish marine blue. Swissair initiated a veritable fashion competition among European airlines.
In 1952, the cabin layout on northern transatlantic routes was changed to one with a first and a tourist (economy) class. The first-class cabin had comfortable chairs on which one could sleep, given the name "Slumberettes". Those sleeping chairs were soon succeeded by beds, modelled after the US Pullman railway cars. Two adjacent seats were moved towards each other and formed a lower berth. The wall panel could be folded downward, forming the upper berth in which the other person could sleep. A year later, a tourist-class cabin was introduced on intra-European flights.
In 1953, Swissair, with the city of Basel, founded a charter company called Balair, reusing the name of one of its predecessors, a company that initially used older Swissair aircraft to fly to holiday destinations.
As the first European customer, Swissair bought the Douglas DC-7C, which enabled the company to provide non-stop flights to the United States. For shorter-range routes, the Convair Metropolitan was used.
In 1957, the Far East was added to the route network. Direct flights to Tokyo had intermediate stops in Athens, Karachi, Bombay, Bangkok and Manila. That same year, Swissair partnered with Aristotle Onassis to form the new Greek airline, Olympic Airways.
While competitors first looked at turboprop aeroplanes to replace their piston-engined craft, Swissair introduced jet aeroplanes. Together with SAS, Swissair bought Douglas DC-8s, which were delivered beginning in 1960. For medium- and short-range routes, the Sud Aviation Caravelle was purchased. The aircraft were maintained in concert with SAS, and manuals for operation and maintenance were co-written.
Swissair was one of the few companies to order the Convair 990 Coronado for its medium- and long-range routes. Although the aircraft did not initially fulfil contractual specifications, they were liked by employees and customers. They operated on the airline's routes to South America, West Africa, and the Middle and Far East.
1966 saw the introduction of the Douglas DC-9. That aircraft became the backbone of the short- and medium-range routes and, after convincing Douglas, soon merged with McDonnell Aircraft to create McDonnell Douglas and ultimately merged with Boeing, offering a stretched variant: the DC-9-32. For the first time, Swissair was the launch customer of an aircraft type.
Armin Baltensweiler led the company for more than 20 years after taking over as president of the directorial board in 1971. In the same year, the first Boeing 747-200 jumbo jet was acquired, and in the next year, the first McDonnell Douglas DC-10-30 followed. Both types shaped the long-haul fleet until the 1990s. Again, the specifications of both aircraft were developed in collaboration with SAS. Also in 1972, Switzerland introduced a prohibition of night flights, which led to the cessation of cheaper night fares.
In 1973, the company struggled with severe turbulence: a currency crisis, collective chaos, an air traffic controllers' strike, the October War, and the first oil crisis were weathered without significant damage. In the same year, the regional representative of Swissair in Buenos Aires was kidnapped by the Montoneros. After 38 days in captivity, he was released after the payment of SFr12.35 million (equivalent to SFr29.69 million or US$32.63 million in 2021). The airline also phased out the CV-990s, which were a type of aircraft known for their distinctive design and performance, during that time.
Swissair was the second European airline to offer service to the People's Republic of China, introducing service to Beijing and Shanghai in 1975. In the same year, Swissair was the launch customer for the DC-9-51. In 1977, Swissair was the launch customer for the third DC-9 type, the DC-9-81 variant, now called the MD-80. Armin Baltensweiler had travelled to a meeting of the McDonnell-Douglas board of directors in St. Louis to convince them to further stretch the fuselage of the DC-9-51. Baltensweiler was called the "Father of the MD-80". In 1979, Swissair was the first company to order the Airbus A310 and the jumbo jet variant with a stretched upper deck, the Boeing 747-300. Later on, the Fokker 100 short-range aircraft and the three-engined MD-11 were aircraft for which Swissair was the launch customer. 1983 saw the replacement of the older DC-9s with MD-83s.
Since the 1960s, Swissair has been a world leader in the development of cargo reservation systems (CRS). PARS and CARIDO were examples of systems enabling the booking of passenger seats and freight space.
"The flying bank"
After the 1960s, air traffic increased quickly and allowed many airlines—many of which were quasi-monopolists on their routes—to yield high revenues. In geographic terms, the central position of Switzerland in Europe helped it generate revenue from transfer passengers. By the early 1970s, Swissair had become known as "the flying bank", appealing to its large deposits and huge liquidity. In geographic terms, the central position of Switzerland in Europe helped it generate revenue from transfer passengers. By the early 1970s, Swissair was becoming known as "the flying bank" due to its large hidden assets and significant liquidity. Second, "flying bank" was the designation for a corporate group that cared more about financial management than about flying aeroplanes.
At the beginning of deregulation and liberalisation of the airline industry in the United States in the late 1970s, airlines felt increased financial pressure. In 1978, Moritz Suter founded a regional airline named Crossair, which put Swissair under additional stress. To counter these changes, Swissair invested their large financial reserves into takeovers and into flight-related trades like baggage handling, catering, aircraft maintenance, and duty-free stores. This strategy diversified economic risks at the expense of the core business of Swissair: commercial aviation.
As a result of a 12-day global flight ban on the DC-10, imposed by the US Federal Aviation Administration after the crash of American Airlines Flight 191 on 25 May 1979, a significant portion of Swissair's long-haul fleet remained grounded. On October 7, after landing in Athens, a DC-8 overran the runway and caught fire, killing 14 passengers. By the end of that year, kerosene prices had doubled, and fuel costs had increased from 12% to 16% of total costs. Swissair was the first to order the Airbus A310, designed with a two-man cockpit for more traffic-tight short distances and shorter medium distances, and accepted options for 10 more units. Another Boeing 747 was ordered. Dublin was added to the route network as a new destination, but service to Beirut had to be discontinued in mid-July due to the political turmoil in Lebanon.
Swissair was able to outperform the competition in a year that experts deemed to be the worst in the history of civil aviation, largely due to its strategic decisions and maintaining a strong brand reputation despite the difficulties faced by the industry, such as economic downturns and increased operational costs. Swissair maintained its proven cabin division into first and economy classes, unlike other airlines that began to offer a second-tier executive class. The short-haul fleet was renewed with the MD-81 (DC-9-81) introduction into service in 1980. This type of aircraft partially replaced the older and smaller DC-9. In addition, modern, fuel-saving aircraft, such as five new Boeing 747s with extended upper decks and two DC-10-30s with a longer range, were ordered. With the connection of Zurich Airport to the national railway network, bus delivery services from Zürich were discontinued. Air passengers were already able to check their luggage at the rail station. The route network was expanded with service to Jakarta, but flights to Tehran and Baghdad had to be suspended after the outbreak of the Iran-Iraq War. By the end of 1980, Swissair was represented in 196 cities. New offices or points of sale were opened in Luxembourg, Ulm, Ottawa, Raleigh, Westchester, Valparaíso, Jubail, Sanaa, and Salisbury/Harare. Under the name Swissôtel, the hotels Président in Geneva, International in Zürich, Drake in New York, and Bellevue Palace in Bern were administratively combined.
Concentration
Regarding further liberalising Europe's airline market, Swissair focused more on commercial aviation and extended its partnerships. As the first European airline to do so, Swissair signed a cooperation treaty with Delta Air Lines and Singapore Airlines in 1989 to create the "Global Excellence" alliance. In 1990, together with SAS, Austrian Airlines and Finnair, the "European Quality Alliance" was founded. The last alliance was later renamed "The Qualiflyer Group".
Many airlines lost money in 1990 and 1991 due to the weak economy, the Gulf War and its aftermath, and rising operational costs. The ongoing liberalisation of industry has also made competition stronger. As a result, Swissair lost 99 million Swiss francs in the first half of the year and couldn't pay dividends to its shareholders. Swissair had to use its savings to cover big losses in the commercial aviation sector in 1991 and 1992.
On January 1, 1991, commercial aviation in Europe was completely liberalised, and existing capacities led to aggressive competition among airlines. In a national referendum held on 6 December 1992, Swiss citizens voted against joining the European Economic Area (EEA). This referendum was a significant disservice to Swissair, an airline with a tiny domestic market: its planes were not allowed to take up passengers during intermediate landings in EEA countries (e.g., Zürich-Frankfurt-New York), and Swissair was not allowed to offer tickets for sections that fully lie in EEA member countries (e.g., Zürich-Frankfurt-Paris).
See also freedoms of the air.
Like other airlines based in smaller countries, Swissair was now under significant pressure to compete effectively in the global market, particularly as larger airlines formed alliances to enhance their reach and influence. More and more national airlines have affiliated themselves with airline alliances to maintain a worldwide market presence. But to be appealing to American alliance partners, an airline must have a critical size in terms of passenger numbers. To meet that goal, in 1993, an alliance between Swissair, KLM, SAS, and Austrian Airlines was proposed. This project bore the name "Alcazar" (after the Spanish castle) to create a single Central European airline. However, in various countries, this project has been criticised. In Switzerland itself, it was thought that the huge financial assets were too precious to sacrifice to merge Swissair with the other airlines.
Hunter Strategy
In the late 1980s and early 1990s, Swissair tried to merge with Air France, Lufthansa, and British Airways to obtain access to a wider European market. Finally, after deregulation, Swissair tried to expand beyond its home market; after the Alcazar project was cancelled, Swissair aimed to be a major force in European aviation.
In the mid-1990s, Swissair initiated the disastrous "Hunter Strategy", a major expansion programme devised by the US consulting firm McKinsey & Co. Using this strategy, Swissair aimed to grow its market share by acquiring small airlines rather than entering into alliance agreements. Swissair decided to acquire 49.5 per cent of the very successful Italian charter airline Air Europe; the unprofitable Belgian flag carrier Sabena; and significant stakes in Air Liberté, AOM, Air Littoral, Volare, LOT, Turkish Airlines, South African Airways, Portugália, and LTU and planned to acquire stakes in Aer Lingus, Finnair, and Malév, as well as Brazilian carriers TAM and Transbrasil. By mid-2000, it was predicted that Swissair would lose between SFr3.25 billion (equivalent to SFr3.51 billion or US$3.86 billion in 2021) and SFr4.45 billion (equivalent to SFr4.81 billion or US$5.29 billion in 2021) over the next three fiscal years. The management, however, maintained classical restructuring, and the Board approved the reorganisation of LTU for approximately SFr500 million (equivalent to SFr540.41 million or US$593.86 million in 2021). Furthermore, there were plans to take over Alitalia.
In October 1999, Delta Air Lines cancelled its transatlantic Atlantic Excellence alliance with Swissair and Sabena, citing the desire to partner with Air France instead.
During the European airline deregulation transition, Jeffrey Katz served as CEO of Swissair from 1997 to 2000, a period of increased fuel prices and industry overcapacity.
In the summer of 2000, SAir's CEO Philippe Bruggisser came under public pressure as the press published the group's financial situation. Each day, Swissair and Sabena were losing one million francs, while LTU and the French investments were losing another million every day. For the first time, the board began to consider scenarios for phasing out its existing participation in other airlines as Swissair looked to withdraw from its foreign investments. In January 2001, Bruggisser was summarily dismissed. Moritz Suter, the founder of Crossair, was nominated as the new CEO of SAirLines and thus all group airlines, including Swissair. After only 44 days in charge, Suter resigned.
In March 2001, two studies by consultants were presented to the board, which showed the financial difficulties of SAirGroup, indicating that the company was facing significant challenges that ultimately led to the resignation of the directors, including issues such as mounting debts and declining revenues. At this point, the directors resigned, with only Mario Corti, the former CFO of Nestlé, remaining. From April to August 2001, the group's Moody's credit rating was gradually downgraded from A3 to B1 (it was downgraded further to B2 on September 18). The buying spree created a major cash flow crisis for parent company SAirGroup and was exacerbated by the environment caused by the September 11 attacks. Unable to make payments to creditors on its large debt, and with the refusal of UBS to extend its line of credit, on 2 October 2001 the entire Swissair fleet was abruptly grounded. Many blamed UBS for the fiasco, causing demonstrators to take to the streets with signs referring to UBS chairman Marcel Ospel as "Bin Ospel", quoting al-Qaeda leader Osama bin Laden, and redefining the bank's acronym, "UBS", as the United Bandits of Switzerland.
Two large bridge loans from the Swiss government were required to finance the continuation of flight operations. This notwithstanding, with the resumption of flight service, it was necessary for flight crews to carry large sums of cash to purchase fuel at foreign airports.
Grounding
On 1 October 2001, Project "Phoenix" was announced, under which parts of the group sought a payment delay. The Swiss federal authorities were willing to pay back half of the loan, so they secured the continuation of service.
From Wikipedia’s article on Swissair, shared under CC BY-SA 4.0.3