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Alliance strategy and the fall of Swissair

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  • Suen, Wilma W

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.

Suggested Citation

  • Suen, Wilma W, 2002. "Alliance strategy and the fall of Swissair," Journal of Air Transport Management, Elsevier, vol. 8(5), pages 355-363.
    • Handle: RePEc:eee:jaitra:v:8:y:2002:i:5:p:355-363
    DOI: 10.1016/S0969-6997(02)00017-0
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    References listed on IDEAS

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    1. Chang, Yu-Chun & Williams, George, 2001. "Changing the rules—amending the nationality clauses in air services agreements," Journal of Air Transport Management, Elsevier, vol. 7(4), pages 207-216.
    2. Park, Namgyoo K. & Cho, Dong-Sung, 1997. "The effect of strategic alliance on performance," Journal of Air Transport Management, Elsevier, vol. 3(3), pages 155-164.
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    Cited by:

    1. Redpath, N. & O'Connell, J.F. & Warnock-Smith, D., 2017. "The strategic impact of airline group diversification: The cases of Emirates and Lufthansa," Journal of Air Transport Management, Elsevier, vol. 64(PB), pages 121-138.
    2. Reale, Filippo Gian-Antonio, 2017. "Liberalization, hysteresis, and labor relations in Western European commercial aviation," MPIfG Discussion Paper 17/16, Max Planck Institute for the Study of Societies.
    3. Knorr, Andreas & Arndt, Andreas, 2004. "Alliance strategy and the fall of Swissair: a comment," Journal of Air Transport Management, Elsevier, vol. 10(2), pages 119-123.
    4. Moon, Joonho & Lee, Won Seok & Dattilo, John, 2015. "Determinants of the payout decision in the airline industry," Journal of Air Transport Management, Elsevier, vol. 42(C), pages 282-288.
    5. Zuidberg, Joost, 2019. "Network geographies and financial performances in low-cost carrier versus network carrier competition: The case of Norwegian versus SAS," Journal of Transport Geography, Elsevier, vol. 79(C), pages 1-1.

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