a2-6 swissair 071202v5
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INSEAD - Singapore MBA Analysis Report on Swissair demiseTRANSCRIPT
Group A2-6 INSEAD Sept 2002Management Accounting & Control
Management Accounting & Control
December 10th, 2002
EVATM at SwissairGroup A2-6
MBA ProgrammeSeptember 2002
Group A2-6 INSEAD Sept 2002Management Accounting & Control
Introduction
“The stability provided by SAirGroup’s structure allows us to pursue and finance an expansion
programme that ensures the Group maintains its value and its entrepreneurial independence amid a
global economy that is increasingly tending towards concentration in all sectors.”1
How did a company that embodied Switzerland’s typical image of stability and wealth, manage to
destroy billions of dollars of value and end up bankrupt, selling its activities to banks for a penny?
This paper will briefly analyse the severe trend of value destruction followed by SAirGroup before its
final demise in October 2001. It will continue to detail the enormous value destruction that took place
during the 30 days that sounded the death knell for Swissair. Finally, it will comment on how the
“stool” framework for value creation assesses the current rescue strategy and how an alternative plan
would have made it more viable and valuable for the Swiss government and Swiss people.
A dangerous trend before 9/11
SAirGroup was better known for its flagship subsidiary, Swissair. Launched in 1919, this boutique
pursued an 83-year growth story, acquiring planes, developing routes and remaining constantly
profitable. By the end of 1998, Swissair was operating a CHF5.4bn fleet (consisting of CHF2.1bn of
its own aircraft, CHF1.6bn on financial leases and CHF1.7bn operating leases), amounting to roughly
150 planes, with 44,000 staff. In addition to the airline business, the group had started investing in
related sectors thus becoming a conglomerate of air transportation-related businesses. As the direct
consequence of this ‘Hunter’ strategy, SAirGroup had a complex corporate structure (see Exhibit 1).
The fate of Swissair was sealed by a combination of this massive capital investment policy funded
through debt, the uncertain economic conditions in a traditionally sensitive sector, and hidden business
malpractices. Even though we will not perform a detailed Economic Value Added (EVATM) analysis
over the period pre-2001 as it is out of the scope in this paper, the EVATM formula can help structure
this assessment:
EVA = NOPAT – Inv. Capital x WACC
1. Roughly, we have NOPAT = operating revenue – costs. The trend during the period 1998-2001 at
SAirGroup represented a simultaneous squeeze of operating revenue and increased costs.
1 SAirGroup annual report, 1999
Group A2-6 INSEAD Sept 2002Management Accounting & Control
a. The observed revenue decrease before October 2001 (cf Exhibit 2) exceeded the
expectations of the company. Three forces combined to disappoint analysts: general trends
in the airline industry, competition, and the impact of terrorist attacks in the month of
September 2001.
i. General trends of industry: The overall economic environment surrounding Swissair
worsened in the years before the final collapse. Firstly the increase in international
seating capacity came as a direct threat to Swissair’s business model that was based on
cross-border flights. (cf Exhibit 3). Secondly, the worst accident in Swissair’s history
happened in 1998 with the death of 229 in the fatal New York – Geneva SR flight 111.
Lastly, the troubled social climate in some subsidiaries (e.g. AOM in France) limited
the exploitation of possible synergies.
ii. Competition: The development of low cost carriers stiffened the competition not only
on price but also, and more importantly, on Swissair’s distinctiveness: quality of
service (cf Exhibit 4). Secondly, deregulation of the European skies urged Swissair to
join an alliance (Qualiflyer) to face the increase in power of the larger airline alliances
such as StarAlliance and Skyteam. However the defections of both Delta and Austrian
Airlines in 1999 and 2000 respectively, left Swissair almost solely responsible for both
acquiring new customers (marketing inferiority) and retaining existing ones (stickiness
due to other loyalty programmes).
iii. Impact of 9/11: Even though the company entered a troubled period as soon as August
2001 when an audit revealed that its debt was greater than previously reported, the
terrorist attacks in the US played a critical role in the cash crisis that occurred in
October.
b. Swissair’s falling revenues were exacerbated by a latent cost increase at SAirGroup. Even
though the research of optimal synergies between the numerous entities of the holding
produced some results in the areas of purchasing, yield management and catering,
important business drivers followed a negative trend. This trend was visible on both the
direct and indirect costs side.
i. Purchases: two main components of Swissair’s purchases followed an increasing trend.
Firstly the continuous increase in jet kerosene prices as well as the rise of the US Dollar
increased their cost base. During the period 1999 to 2000, prices rose 56% in highly
volatile markets, leading to the reduction in the effectiveness of hedging strategies.
Secondly, plane leasing had reached levels of CHF8bn by the 7 th November 2001.
Group A2-6 INSEAD Sept 2002Management Accounting & Control
Such leases were accounted for as capital leases, with the main lessors being General
Electric and American International Group (AIG).
ii. Process costs: over the period 1998 – 2001, logistics, facilities, and operations costs
grew tremendously. Major burdens on Swissair were the crew salaries that were higher
than the industry standard. For instance, a comparison with Crossair, whose salaries
represented the industry norm, indicated that a Crossair pilot earned between CHF56k
and CHF135k compared to Swissair pilots who earned salaries ranging from CHF81k
to CHF290k.
iii. Sales & marketing: the declination of the “Hunter” strategy for the passenger
transportation business implied building and the consolidation of market share.
Following the method used by other major carriers, Swissair joined and contributed to
market the Qualiflyer program with limited results. For instance, from 1998 to 1999
the operating revenue of Qualiflyer group decreased by 1.4% from EUR10.8bn to
EUR10.7bn, this was matched by a decrease in the number of passengers, which fell
from 54.4 to 53.7 million over the corresponding period.
2. Invested capital at SAirGroup increased substantially during the period 1998-2001. The main
components of invested capital are fixed assets, net working capital and investment in other
companies. While the first components were strongly controlled, for instance more planes were
being operated though operating leases, as opposed to company-owned aircraft, the “Hunter”
strategy had a strong positive influence on the level of invested capital. Consequently, SAirGroup
increased its invested capital by 52% from 1998 to 2000, from CHF5.5bn to CHF8.4bn as a result
of acquisitions.
3. WACC: The evolution of WACC is difficult to compute due to the lack of data regarding the cost
of debt and the cost of equity. However, it is certain that WACC remained constant or even
increased between 1998 and 2001 for two reasons. Firstly, on the equity side, the reduction of the
equity risk gained by diversification was offset by the tough economic prospects discussed earlier.
Secondly, the impact of debt financing was subsequently reinforced by the discovery of hidden
debt in August 2001; which would have had the negative impact of increasing the WACC.
The combination of severe business prospects, the unsatisfying market results, and questionable
internal practices created a pattern of value destruction (negative EVATM, cf Exhibit 5) resulting in a
Group A2-6 INSEAD Sept 2002Management Accounting & Control
scenario ripe for the value destruction that occurred in the month preceding the announcement of
Swissair’s bankruptcy on the 1st October 2001.
Swissair’s failure -
One of the fascinating aspects of Swissair’s death is the speed at which it occurred. How could a
company that had been constantly profitably over the course of its 71-year history expire so quickly?
It will be shown that both mismanagement in the SairGroup and financial irregularities contributed to
weakening the foundations upon which Swissair was based, and in the process removed Swissair’s
ability to act for itself. Prior mismanagement eroded the ownership of Swissair’s decision-making
rights away from the company towards its creditors: the banks and the government. Now at their
mercy, it only took one liquidity crunch, that normally would not have taken down a company the size
of Swissair, to destroy the company.
The crisis that was to be the end of Swissair began innocuously at the end of 2000, with the
announcement that for the first time in its history Swissair had made a loss. The size of the loss was
not trivial; it amounted to CHF2.9Bn and consumed almost the entirety of Swissair’s capital reserves.
Managerial mismanagement has been blamed for these losses, which were generated by a series of ill-
advised acquisitions (such as the Belgian, Polish and Portuguese carriers Sabena, LOT and TAP)
fuelled by Swissair’s wish to be the centre of its Qualiflyer alliance following the withdrawal of Delta
and Austrian Airlines. However with passenger levels behind expectation and the world descending
into a global recession, the enterprise was unable to finance its ambitious plans and Swissair
accumulated a gigantic mountain of debt.
A new CEO was drafted into Swissair. Formerly the CFO of Nestle, and Harvard Business School
graduate, Mario Corti seemed to be the ideal choice to guide the company back to profitability. Corti
was immediately thrown into negotiations with UBS (Swissair’s house bank) and Credit Suisse over
further credits and the reorganisation of Swissair. Immediately the decision rights begun to move
away from Swissair’s management as it became reliant on the banks. Corti’s problems worsened at
Swissair as he begun to discover hidden liabilities in special structures in offshore accounts in the
Cayman Islands. He immediately changed the accounting standards which revealed a mountain of
unaccounted debt that spiralled from CHF6.8bn at the end of 2000 to CHF15bn at the end of
September 2001. Such an increase in the plight of Swissair only served to strengthen the position of
the banks and the government.
Group A2-6 INSEAD Sept 2002Management Accounting & Control
In an effort to reduce expenses and debt, Corti announced the dismissal of 1,200 employees, as well as
preventing the further acquisition of Sabena and TAP shares. In June of that year Corti announced
that Swissair would have to save CHF500mn if the company were to survive the year. On June 21 st
SAirGroup’s shares dropped below CHF100 for the first time (cf Exhibit 6), their lowest ever level.
The beginning of September started bad and following the events on the 11 th September got worse.
Swissair, like its competitors suffered. It asked for state aid and announced that it was facing a
liquidity crunch. Only drastic changes and a cash injection would solve Swissair’s problems. Both of
these seemed to have been met, Corti approached Berne who agreed to keep Swissair alive by agreeing
a CHF325mn injection of funds, and on September 24th Corti announced his restructuring plans for
Swissair. Swissair and its profitable regional subsidiary Crossair would join to create a new airline,
The Swiss Air Line2, while at the same time maintaining each airline’s individual brand. This merger
was to be accompanied by a 10% reduction in the workforce, up to 7,000 employees, were to be made
redundant. Representatives from Swissair and Crossair announced that Swiss Air Lines would use the
lower-cost Crossair structure, while maintaining Swissair’s high quality.
For a while it seemed that Swissair would be safe: A Swissair spokesman announced that following
the government’s promise of the cash injection, ‘a solution to the liquidity crisis is emerging’.
Swissair was safe for now – or so they thought. Interpret the events of the last three days of
September 2001 as you will, but the facts stand for themselves. Swissair went from a tenable position
to bankruptcy in the space of three days, 71 years of history were at an end and billions of Swiss
Francs in value had been erased.
Following the announcement of the government’s intervention, UBS announced that there was no
need for the government’s money, as the airline’s house bank it would put together a financial package
to ensure Swissair’s survival. After negotiations between Swissair and UBS and Credit Suisse, it was
agreed on September 29th that the banks would purchase a CHF260mn share in Crossair and give
Swissair an interim credit of CHF250mn to guarantee flights until October 3 rd. The money was to hit
Swissair’s accounts by 7pm on the 1st October – it never arrived. Frantic attempts by Berne to reach
Marcel Ospel, the CEO of UBS were met by secretaries who informed the Swiss finance minister that
Ospel was uncontactable all day, being aboard a private jet to New York. On October 2 nd, Corti was
forced to declare Swissair bankrupt, and the Swissair fleet was grounded temporarily stranding 39,000
people worldwide. On October 2nd SAirGroup’s share price dropped from around CHF50 to CHF1.27
(cf Exhibit 6) almost wiping out the company’s entire share capital. Swissair’s cash flows relating to
2 Swiss Air Lines would become the official name of Swiss, the airline that was to emerge from the Phoenix rescue plan
Group A2-6 INSEAD Sept 2002Management Accounting & Control
their debt financing stretching to 2020 collapsed saddling the company with CHF17bn worth of debt
leading to the ensuing deterioration of SAirGroup’s debt rating. The withholding of the cash
effectively killed Swissair and destroyed billions of Swiss Francs in share capital as well as resulting
in huge value destruction linked to the Swissair brand name and lost customer loyalty.
Uproar followed in Switzerland, Ospel was portrayed as public enemy number one. Harsh headlines
such as ‘UBS – United Bandits of Switzerland’3 flashed across the country. Feelings of resentment
deepened when UBS came out with its own rescue plan in the form of the Phoenix Plus plan on
October 3rd. This illustrated that UBS was perfectly aware of the consequences that its actions would
have, and had effectively been able to blackmail Swissair due to its empowered position over the
company.
Swissair was powerless to stop its death spiral. Put simply, Swissair through managerial
mismanagement and financial malfeasance had found itself in the unenviable position of having to rely
on the banks and the government for its survival. On the 3rd October UBS board member Peter Kurer
issued a statement on behalf of his harangued employer:’ it would no longer have been possible to
save Swissair this autumn.’ Kaspar Villiger responsible for finances in the Bundestrat4 told the Neue
Zuricher Zeitung that the Bundestrat had ‘underestimated the internal dynamics of such a liquidity
crisis and thus the speed with which the situation could come to a head.’ The statements of the
government and the banks can be treated with skepticism. UBS knew of the situation with Swissair
and delayed a promised payment long enough to ground the airline. UBS’s intentions for doing this
become clearer later in the paper. The government was also aware of the severity of the situation,
Corti himself has made it publicly known that he personally informed the relevant parties at the
Bundestrat of the severity of Swissair’s plight. However such complaints are irrelevant, by this stage,
Swissair had lost control of its destiny.
Rescue plans
1. Immediately following October’s collapse, two rescue plans were presented to the board of
directors and the Swiss government: Phoenix Plus and Globus. After thorough discussions, the
Phoenix Plus plan was chosen and implemented creating the new airline Swiss. The paper will
analyse in detail each plan following the architecture set out through the value objective “stool”
framework.
3 Front Page of Tribune de Geneve October 3rd 20014 Switzerland’s Upper House situated in Berne
Group A2-6 INSEAD Sept 2002Management Accounting & Control
a. As discussed above, the Phoenix Plus project was proposed by the two Swiss banks, UBS
and Credit Suisse. The plan was chiefly directed toward relieving the Swiss government
from the refinancing burden, with both UBS and Credit Suisse injecting a CHF257m to
continue operations. The immediate operational measures resulted in the immediate
transfer of flights, planes and part of the personnel from Swissair to its subsidiary Crossair.
On the corporate side, Crossair was refinanced by the banks in exchange for 70%
ownership. SAirGroup was declared bankrupt and its subsidiaries were to be sold as soon
as possible to generate cash. The existing debts towards lessors remained unpaid, the
company taking the unprecedented risk of provoke GE Capital and AIG in the courts. The
new company was to be renamed Swiss and was to be led by the capable yet inexperienced
former Crossair management team, headed by former pilot André Dosé.
Value was to be created from a decrease in operating and overhead costs, thus increasing NOPAT, this
would be complimented by a strong reduction of in debt levels decreasing WACC, and a large
decrease in invested capital since the majority of subsidiaries were to be spun off.
b. The alternative plan Globus was put together and presented by financier Pascal Najadi,
with the backing of American giant Merrill Lynch. The plan aimed at keeping the Swissair
brand alive and restructuring the group to ensure the continuation of operations with an eye
toward increased efficiency. From the financial standpoint, the company was supposed to
repackage and market its debt with the financial expertise of Merrill Lynch and the
guarantee of the Swiss government. The government were to be protected by a warrant
emission, and the lease contracts with GE Capital and AIG were to be renegotiated. On the
operational standpoint, the group was to reduce debt levels by 40% in three to four years,
divest from non-strategic subsidiaries at competitive prices, and reorganise the group
structure around a rescaled Swissair. More precisely, the company was supposed to carry
on 26 long and 26 short-haul routes including the profitable Geneva-New York route.
Accordingly, the implementation of Globus would have created value. Levels of NOPAT would have
been increased due to strong reorganization, a decrease in WACC would have arisen through debt
rescaling, and a decrease in invested capital would have resulted from the divesture of non-strategic
assets and subsidiaries.
Group A2-6 INSEAD Sept 2002Management Accounting & Control
2. Interesting conclusions can be drawn through the analysis of the rescue plans in accordance to the
“stool” framework. Overall, the Phoenix Plus has a confused definition of the overarching value
objective. The official claim is the re-launch of a viable national airline in Switzerland creating
maximum value for shareholders as well as preserving jobs and minimizing the weight on national
finances. However the timing of this proposal on October 3rd 2001 headed by UBS, who were
responsible for the late payment of the bridging loan directly leading to the grounding of Swissair
has led some commentators to suggest that an alternative motive lies behind the implementation of
the Phoenix Plus rescue package. These commentators view the real objective of the rescue
package as the acquisition of the best of Swissair by the banks at a discounted price. After a
period of restructuring, achieved by pressuring unions and the government, the banks would sell
the newly profitable airline to a major European carrier such as British Airways or Lufthansa for a
profit. The unpleasant business of the liabilities and the cost of job cuts would inevitably be left to
the Swiss government and the taxpayer.
Further criticism of the government’s choice to implement Phoenix Plus can be drawn following
analysis of the effects that it will have on decision rights and empowerment, information systems and
incentives.
a. Decision rights & empowerment: in accordance with the Phoenix Plus plan, the
management of the new airline would be headed by the former management team of
Crossair. Headed by André Dosé, a former pilot, the management team is viewed by the
industry as being young and inexperienced. Whilst this team have not yet had the
opportunity to prove their ability, they lack the experience and influence required in the
management and restructuring of an international airline and its debt schedule. Dosé,
through clearly able, lacks the training to succeed in this challenge and would have
difficulties in persuading analysts on the merits of the business plan leading to problems in
reducing the WACC. Contrary to Phoenix Plus, the Globus plan aimed at keeping the
existing senior management structure of Swissair in place. The existing CEO Mario Corti,
was recently appointed at the beginning of 2001 from his role of CFO at Nestle. It was
Corti, who had exposed the hidden debt, and demanded the changes in Swissair’s
accounting practices, and it was Corti who was widely perceived as being the man who had
the ability to take the airline forward. The Globus plan also accommodated for the existing
management team of Swissair being supported by a team of specialists (“Projekt-Team”)
from Merrill Lynch, whose responsibility was to handle the financial recovery of the
company. The Globus plan thus ensured that the decision makers would have the relevant
Group A2-6 INSEAD Sept 2002Management Accounting & Control
knowledge to make the correct value creating decisions. In addition, the pilots’ union
publicly demanded the close examination of Globus project by the authorities. The support
of this critical group of stakeholders would have been a key element in the successful
implementation of the plan, thus of value creation.
b. Information systems: in terms of architecture, the rapid changes that the Phoenix plan
proposed would lead to the blurring of the information patterns. The information system
represented the ‘leg’ of the ‘stool’ that we argue was dealt with most effectively by the
Phoenix plan. For example, the divesture from non-strategic structures would include the
eradication of the ‘grey’ areas that were the sophisticated financial systems hidden in
complex offshore structures, thus improving the line of sight relating to the companies
financing. A second benefit of the Phoenix plan in relation to information management,
related to the level of information sharing in the company being improved by the launch in
November 2001 of a website dedicated to detailing the specifics of the Phoenix plan. This
website was to be accessible to employees via intranet, and received over 200,000 ‘hits’ in
the first three weeks. This initiative aimed at sharing more information with the personnel
to decrease apprehension and re-motivate people around the value creation objective.
c. Incentives & rewards: The implementation of the Phoenix plan has led to significant
reductions in incentives and rewards. We therefore conclude that this constitutes weakest
leg of the ‘stool’. By cutting 13% of the workforce and the alignment of salaries to the
Crossair basis (as mentioned above, differences up to CHF155k a/year for pilots) left the
crucial middle management and key employees in a state of despair and un-motivation that
now constitutes a major risk for recovery. Alternatively, Globus proposed to maintain the
differences in wages for flight personnel, arguing that this reflected the cost of extra service
and extra security linked to the experience gained on long-haul flights that made Swissair’s
reputation of quality so distinctive. The Phoenix plan proposed that a major airline should
realign its values along those of a regional carrier immediately. This clearly cannot work
and would compromise levels of quality and safety on the new airline, a fact that was sadly
reflected in the loss of flight LX3597 outside Zurich with 24 lives in late November 2001.
Group A2-6 INSEAD Sept 2002Management Accounting & Control
Swiss Air Lines (Swiss)
It is briefly necessary to understand the new airline that has emerged from the Phoenix rescue package
and attempt to visualise whether its business plan has the potential to recoup some of the value that
was lost in the demise of Swissair. In a recent poll only 7% of the Swiss population thought that the
airline would survive. I think this figure speaks volumes of the attitude of the Swiss people to their
new national airline. Whereas Swissair was the pride of Switzerland, which epitomised all things
good about the country such as, service, reliability, and style. Swiss is seen to be an overgrown
Crossair trying to be something that it is not – an international airline. Swiss’s business plan relies on
using Swissair’s level of service whilst maintaining Crossair’s lower cost structure is unfeasible. In
the airline industry you pay for quality, be it an experienced pilot or airhostess. Recently industry
analysts have suggested that Swiss might struggle to fulfil these lofty ambitions. It has big shoes to
fill; Swissair’s brand name and loyal customer base were worth millions. Swiss has to turn the clock
back 71 years and start building its brand from scratch. It would be advisable to start with its domestic
market, as the Swiss people have indicated that the loyalty they showed Swissair counts for nothing
when it comes to Swiss. A slightly more sinister problem could rock Swiss’s foundations in the near
future. The unpaid leases taken out with GE Capital and AIG have not just disappeared. If Swiss are
proved to be legally obligated to take on Swissair’s debts to GE Capital and AIG, a potentially
terminal court battle awaits the new airline in the future.
Conclusion
This paper has examined in detail the extensive value destruction that has occurred at Swissair. The
speed of the company’s final demise is breathtaking. A company that made one loss in its 71-year
history was bankrupt 10 months later. The paper has detailed the value destruction at Swissair by
analysing the three main components that make up EVATM. Following the collapse of Swissair and the
emergence of the two rescue packages Phoenix and Globus, each project was analysed using the
‘stool’ approach to determine whether they possessed the necessary structure to support a feasible
overarching Value Objective. Furthermore an attempt was made to look into the feasibility of the new
airline, which emerged from the Phoenix rescue plan.
Group A2-6 INSEAD Sept 2002Management Accounting & Control
However, the value destruction witnessed at Swissair is more extensive than previously detailed. It
has been estimated in the long term that the collapse of Swissair will lead to a destruction totalling
between USD40-50bn. The destruction of Swissair runs deep. If the new airline Swiss fails,
Swissair’s collapse would have resulted in the destruction of three brands (including Crossair) in the
Swiss market. Furthermore due to SAirGroup’s inability to support its subsidiaries such as Sabena in
Belgium they too collapsed on the 7th November 2001. SAirGroup was forced to sell off many of its
assets at ridiculously low prices; the sale of GateGourmet Swissair’s international catering division is
a prime example of this. Swissair’s collapse also led to the abandonment of plans for Zurich airport to
be one of Europe’s leading hubs along with London and Amsterdam, resulting in yet more instances of
value destruction.
Value destruction is not just an economic phenomenon. It touches many other parts of society.
Switzerland’s reputation for example has been irreparably damaged, leading one commentator to
write: ‘La Suisse n’est plus la Suisse’ – Switzerland is not Switzerland anymore. Others believe that
allowing Swissair to collapse is a declaration of war of Switzerland’s previously relatively high level
of social provisions. It is possible that this will result in the Swiss ruling classes coming to the
conclusion that they should now follow the policy of cuts in social spending and wages – long the
norm in USA. The Neue Zuricher Zeitung5 noted ‘It is probably the case that with the fall of Swissair
a further, important and considerable piece of “Swiss exceptionalism” – which still exists-will be
irretrievably lost’
5 Neue Zuricher Zeitung October 7th 2001
Group A2-6 INSEAD Sept 2002Management Accounting & Control
Exhibit 1: SAirGroup structure as of 31/12/98 with major subsidiaries highlighted (source Annual
Report 1998)
Exhibit 2: financial trend of Swissair (source annual reports)
-3500
-3000
-2500
-2000
-1500
-1000
-500
0
500
1000
1995 1996 1997 1998 1999 2000
EBIT
Net earnings
SAirGroup
SAirLines SAirLogistics SAirServices SAirRelations SAirIntl Finance Others
•Swissair•Crossair•Balair•Sabena•Volare•Tegel•Air Littoral•Austrian Airlines•Swissair Asia•Other minority stakes
•Swisscargo•Trucking•Cargolux•Other logistics companies
•SRTechnics•Swissport Intl (techincal assistance)•Various services (taxis, hotels, cruises, photo, consulting, real estate)
•Swisshotel (and other prestigious hotels)•Gate Gourmet (catering)\•Rail Gourmet•Nuance (duty-free shops)•Others (restaurant chains, local caterers)
(based in Jersey) •Flightlease•Undefined holdings based in Guernsey
Group A2-6 INSEAD Sept 2002Management Accounting & Control
Exhibit 3: international seating capacity as a % of total capacity (source CSFB)
Exhibit 4: example of development of low-cost carriers in the UK (source BA)
15%
17%
19%
21%
23%
25%
27%
29%
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Group A2-6 INSEAD Sept 2002Management Accounting & Control
Exhibit 5: EVA trend at SAirGroup before the final collapse (source Annual reports, assuming WACC of 10% as per industry average)
Exhibit 6: SAirGroup stock price during the collapse (source Boursorama.com)
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-2500
-2000
-1500
-1000
-500
0
500
1998 1999 2000
CHF M