Alliance strategy and the fall of Swissair

Alliance strategy and the fall of Swissair

Journal: Air Transport Management

Author: Wilma W. Suen

Published: 2002

Abstract

This paper argues that the Swissair Group’s bankruptcy is a direct consequence of mistakes made in implementing its alliance strategy. While the strategy was sound, analysis of the relative resource-dependence between Swissair and its partners will show that Swissair did not need equity to bind its partners to it. Moreover, this approach to operationalising the alliance strategy undermined a corporate level goal to diversify risk beyond the airline business. Financial analysis will show that the airline investments were unprofitable, increased the Group’s leverage and weakened its cash position. As a result, the Group did not have adequate resources to recover from external shocks.

Keywords: Strategic alliances; Swissair; Qualiflyer; Power; Interdependence; Financial management

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