The Real Crisis of Swissair

On September 2, 1998 Swissair flight 111, en route from York City to Geneva, crashed into the Atlantic, southwest of Halifax Airport. According to seismographic recorders in Halifax and Moncton, the aircraft struck the ocean at 10:31 at night, 8 kilometers from shore, off Peggys Cove.

All 229 people on board were killed.

The resulting investigation by the Transportation Safety Board of Canada (TSB) took more than four years and cost $57 million.

Engaged within hours of the crash, I was the senior public relations consultant to the TSB team during the first year of its investigation.

A month after the publication of the final TSB report on Flight 111, Swissair ceased to exist. Perhaps surprisingly, the fatal crash had nothing to do with the demise of the company.

For most of its 71 years, Swissair was one of the world’s major international airlines. Known as the "Flying Bank" due to its financial stability, it was regarded as a national symbol and icon. Nearly 30 percent of Swissair stock was owned by the Swiss government.

However, a corporate buying spree created a major cash flow crisis. It had been left vulnerable after a $3B cash surplus was turned into a $14B debt, mainly through a strategy of buying smaller European airlines.

On the last day of operations, pilots were given envelopes stuffed with cash to pay for fuel, because no one would accept Swissair's credit. Swissair crews around the world were turned out of their hotels because they were unable to pay their bills.

The collapse of Swissair shook the country's confidence in its business leadership and damaged its reputation for business efficiency. Nineteen Swissair executives faced criminal charges of mismanagement, false statements, and forgery in Switzerland's biggest corporate trial. They were eventually exonerated legally but never forgiven by employees, shareholders, customers or ordinary citizens of Switzerland.