You know, usually when we talk about corporate
collapses on this show, we're talking about risky
tech startups or maybe a fraud -riddled scheme
like Enron. Right, where the whole thing was
a mirage from the start, a house of cards. Exactly.
We don't usually talk about national institutions
that were literally, and I mean literally, nicknamed.
the flying bank. That's what makes the Swiss
Air story so, so disturbing. It wasn't a fly
-by -night operation. It wasn't some dot -com
bubble burst. For 70 years, this airline was,
for all intents and purposes, the gold standard.
It had liquidity that would make a sovereign
nation jealous. It had hidden assets and a reputation
for safety that was practically a religion in
Switzerland. And then in October 2001, it just
stopped. It vaporized. And that's the image I
really want to start with today. October 2nd,
2001, you have captains in the cockpit, ready
to push back from the gate. Passengers are buckled
in and suddenly the fuel trucks just drive away.
Because their corporate credit cards were declined.
Can you imagine? It's unbelievable. A company
that was once worth billions couldn't pay for
its own jet fuel. Right. So our mission today
is to figure out how that happens. How do you
go from being the flying bank, the very symbol
of Swiss stability, to being grounded by a fuel
supplier in a matter of, what, a few years? A
few disastrous years, yeah. Was this just 9 -11?
Was it just a run of bad luck? Or was this a
case of, I don't know, corporate suicide? I'd
argue it's a master class in hubris. I really
would. It's about what happens when you believe
your own marketing so much that you completely
ignore basic economic geography. Wow. It is the
story of the Icarus of the Alps. It flew too
close to the sun. Okay. So let's unpack that.
Let's look at the flying bank era first. Because
to understand the crash, you really have to understand
just how high they climbed. So source materials
give this sense that Swissair wasn't just an
airline. Oh, no. It was a diplomatic tool. It
was a symbol of the nation itself. So where does
that begin? Absolutely. To get the full picture,
we have to go all the way back to 1931. The company
forms from a merger of two smaller entities,
Bel Air and Ad Astra Aero. Okay. Now, context
here is everything. Most European flag carriers
at this time are basically government projects.
Right. State -sponsored. Totally. They are funded
by the state to project power. France, Britain,
Germany, they're just pouring state money into
aviation. But Swiss Air? It was different. How
so? They didn't take the government handout.
Not at first, no. The founders, Bal Zimmerman
and Walter Mittelholzer, they didn't receive
any subsidies in those early days. Which must
have been tough. It was. But that lack of a safety
net, it forced them to be incredibly aggressive
on technology. I mean, if you don't have a government
checking account to fall back on, you have to
actually be better than the competition to survive.
Which brings us to the Lockheed Orion purchase
in 1932. I was reading about this and it seems
like such a pivotal moment for their mindset.
Oh, it's huge. It's almost like a tech startup
buying the most expensive server rack available
just to completely blow the competition away
on speed. That's a great analogy. It was a massive
gamble. The Orion was an American plane. And
you have to remember, Europe was very, very protectionist
in the 1930s. You flew planes built on your own
continent. You flew European planes. But Swissair
bought these American single engine planes for
one reason. They were fast. Unbelievably fast
for the time. The express line, right? Exactly.
The express line. Zurich, Munich, Vienna. They
were so fast that Lufthansa was, well, they were
effectively humiliated. Humiliated how? Like
actually left in the dust? Well, yeah. I mean,
imagine you're the German national carrier, the
pride of German engineering, and this little
Swiss upstart is just flying circles around you
with American metal. Wow. It actually forced
the German aviation industry, specifically Heinkel,
to develop the Heinkel He 70 just to try and
keep up. So you have Swiss Air driving innovation
across the entire continent just by existing.
So right from the start, their DNA is, we will
pay for the best tech to be faster and better
than the neighbors. Precisely. And that premium
mindset, it extended to the people, too. Which
brings us to the story of Nellie Diner in 1934.
The first flight attendant in Europe? That's
an amazing piece of history. It is, but you have
to look at the context. This wasn't just about
service. This was marketing, pure marketing.
She became a celebrity almost instantly. She
was nicknamed the Angel of the Skies. So she
represented this new, modern, civilized way to
travel. That's it. She was the face of that idea.
But her story also highlights the other side
of that coin, doesn't it? It was glamorous, sure,
but it was incredibly, incredibly dangerous.
It was tragic. She died in a crash near Vermling
in Germany on July 27, 1934. And get this, she
had only flown 79 flights. Only 79. What was
the cause? Material fatigue. The wing of the
plane, a Curtis Condor, just broke. It's a stark
reminder that this golden age we look back on
was built on very, very fragile technology. It's
interesting, though, that despite that kind of
tragedy, the brand just kept growing. And by
1947, the structure of the company changes significantly.
This is the post -war boom. This is the moment
they truly become the national carrier. The government,
you know, the federal government, the cantons,
municipalities, and specifically the Swiss Federal
Railways, they all buy in. Ah, so the state finally
gets involved. They do. They acquire about 30
.6 % of the shares. So now they have the official
stamp of approval. And I assume a lot more capital.
A lot more. And that capital is what allows them
to look west. across the Atlantic, the New York
route. The holy grail of aviation, even then.
Absolutely. But in 1947, flying from Zurich to
New York isn't exactly, you know, a direct flight
with a movie and a nap. No, it's an odyssey.
We're talking about a DC -4. It took nearly 21
hours. 21 hours. Yep. You had to stop in Shannon,
Ireland. Then you had to stop in Gander, Newfoundland
to refuel. It was loud. It was vibrating constantly,
but it was the bridge to the new world. It was
a huge deal. And this is where the flying bank
reputation really starts to solidify, isn't it?
It's not just about the planes anymore. It's
about their unique financial and geopolitical
position during the Cold War. This is the key
insight. You've nailed it. Switzerland is neutral.
In a world that is completely polarized, divided
between the U .S. and the Soviets, that neutrality
is a massive commercial asset. How so? Well,
while British Airways or Pan Am were restricted
from flying into certain Soviet -aligned or non
-aligned airspace, or maybe they struggled with
landing rights in the Middle East because of
political alliances. So they could go almost
anywhere. Exactly. They were the neutral broker.
They could connect east and west. So they opened
these incredibly exotic and very lucrative routes
to destinations. Africa, the Middle East and
the Far East that others couldn't touch. So if
you were a diplomat or a spy or a multinational
businessman in the 50s and 60s. You flew Swissair
because it was the connecting node for the world's
elite. It was the one airline that could get
you from, say, a tense capital in Africa to a
financial hub in Europe without any political
baggage. So they're charging premium fares on
these exclusive routes. And at the same time,
they have this culture of extreme thrift and
careful asset management back home. That's the
combination. That's the flying bank. Walter Birchtold,
who took over as CEO in 1950, really crafted
this image. He came from the railways, so he
liked structure. He liked discipline. He's the
one who brought in the modish marine blue uniforms,
moving away from that old military look. And
he introduced the slumberettes in first class.
Slumberettes? What were they? They were basically
these amazing sleeping chairs, fully reclining,
modeled after the beds on American Pullman railway
cars. Sleeping on a plane in the 1950s, that's
some serious luxury. It was the absolute height
of sophistication. But behind all that luxury,
behind the scenes, they were just hoarding cash.
They had immense hidden reserves, undervalued
assets on the books. So they nicknamed the Flying
Bank. It was actually true. Oh, yeah. By the
1970s, financial analysts joked that Swissair
was an investment bank that just happened to
treat flying airplanes as a kind of expensive
hobby. They cared more about the balance sheet
than the flight sheet. That's a perfect way to
put it. And that sounds great, right? Until the
world starts getting violent. And the records
show the 1970s were an absolute nightmare for
them, security -wise. It seems like the flying
bank became a target. It was a loss of innocence
for the entire industry, really. But Swiss Air
took some incredibly heavy hits. You had the
1970 crash on the Tel Aviv route. A bomb. A bomb
in the cargo hold. It had a barometric trigger.
It detonated shortly after takeoff from Zurich.
47 people died. A conveyor 990. Just gone. And
then just a few months later, the Dawson's Field
incident, which is like something out of a Hollywood
movie. It's unbelievable. The PFLP, the Popular
Front for the Liberation of Palestine, hijacked
a Swiss Air DC -8 along with a TWA -707 and a
BOAC VC -10. And flew them all to Jordan. Forced
them to land in the Jordanian desert at this
remote, abandoned airfield called Dawson's Field.
They held the passengers hostage. negotiated
for the release of prisoners, and then... They
blew up the planes. Blew them up. On global television,
it was this incredible spectacle of destruction.
A Switzer plane just exploding in a fireball
in the desert. There was also that bizarre kidnapping
in Buenos Aires in 1973. The station manager.
Yes. The Switzer representative in Argentina,
Kurt Schmidt, was kidnapped by a leftist guerrilla
group called the Montaneros. He was held for
38 days. And this is where the bank. Part of
their name comes back into play. Right. Because
Swiss Air paid. They paid the ransom. We know
how much. 12 .35 million Swiss francs. Wow. That
is a staggering amount of liquid cash to just
hand over in 1973. It is. And it proved two things.
One, the world was becoming a very dangerous
place for high profile Western symbols. And two,
Swiss Air had the money to make those kinds of
problems go away. They had the resources to weather
these storms. For now. But money couldn't solve
the huge structural problem that was coming.
down the pipe in the 1980s and early 90s. Deregulation.
The word that strikes fear into the heart of
every comfortable monopoly. The end of the gentleman's
club. That's what it was. For decades, European
skies were rigged. It was all about high fares,
protected routes, government sanctioned duopolies.
So if you flew from London to Zurich. British
Airways and Swiss Air basically agreed on the
price. There was no real competition. It was
a license to print money for the national carriers.
Then the EU starts tearing down all those walls.
They wanted competition. They wanted lower fares
for consumers. And this suddenly exposes Swissair's
biggest and maybe only Their size. They are a
giant premium airline in a tiny country. Precisely.
Switzerland has a population of, at that time,
maybe 7 million people. You cannot support a
global long -haul network just on that domestic
base. It's impossible. You need to feed the beast.
You do. They needed to pull passengers from France,
from Germany, from Italy to fill those big DC
-10s and 747 flying out of Zurich. So they see
the writing on the wall and they try to merge.
The Alcazar Project. I love that name. It sounds
like a fortress. It was meant to be a fortress.
Project Alcazar, 1993. On paper, it was brilliant.
What was the plan? Merge Swissair, KLM, SA, the
Scandinavian Airline, and Austrian Airlines.
Create a single, massive, central European giant
that could compete with British Airways, with
Air France, with Lufthansa. It makes so much
sense. So why did it fail? If it was such a good
idea, why didn't it happen? National ego. Pure
and simple hubris again. Really? The Swiss public,
the unions and even parts of the board felt that
merging with KLM, which had American partners
and was seen as less premium, would dilute the
precious Swiss brand. So is this feeling of we're
better than them? Totally. They thought we are
the flying bank. Why should we share our gold
with these Dutch and Scandinavians? They thought
their assets were too precious to share. So they
walked away from the deal. A catastrophic mistake
in hindsight. An unbelievable mistake because
it leads directly to the single most critical
moment in this entire timeline. December 6, 1992,
the EEA referendum. Okay, this is a big one.
If you want to pinpoint the exact moment the
death of Swissair becomes inevitable, it starts
here. The Swiss people vote no to joining the
European Economic Area. We need to explain why
this mattered so much for an airline. Because,
you know, trade deals can sound really boring
and abstract. Why was this fatal for Swissair?
It created what was known as the island problem.
Because Switzerland wasn't in the EEA, Swissair
was suddenly treated as a third country carrier.
And this denied them the right of cabotage. Cabotage.
OK, we need to unpack that term. What is it?
Capitize is basically the right for an airline
from one country to operate domestic flights
within another country or, more importantly,
to pick up passengers in a foreign country and
fly them to a third destination. You mean example.
Okay. Under the new EU open skies rules, Lufthansa
could fly from Frankfurt to Paris, pick up a
plane full of French passengers, and then fly
them all to New York. Right. They can tap into
the French market. Exactly. But what about Swissair?
They couldn't do that. They could not. If Swissair
flew Zurich to Paris to New York, they could
only carry passengers who started their journey
in Zurich. They were legally barred from selling
a ticket to a French person who just wanted to
go from Paris to New York. They were locked out
of the internal European market. Completely locked
out. That sounds like a death sentence if your
home market is as tiny as Switzerland's. You're
just watching your competitors eat your lunch
in every single neighboring country. They were
geographic. So they're more expensive and they
have... Less market access. A terrible combination.
So the board panics. They realize, OK, we're
isolated. We're expensive. We can't merge. We
need a new strategy now. And this is when they
call the consultants. Enter McKinsey and Company
and the now infamous Hunter strategy. The name
alone, Hunter. It implies aggression. It implies
strength being on the offensive. It does. And
the logic on a PowerPoint slide probably looked
compelling. It was. If we can't merge with the
big boys because we walked away from Alcazar
and we can't join the EU market legally, then
we will buy our way in. They wanted to build
their own alliance by acquiring equity in other
smaller airlines. Correct. They wanted to create
their own version of the Star Alliance or One
World, but with Swissair at the center, controlling
everything. In theory, that doesn't sound completely
terrible. You buy up smaller carriers, you feed
their passengers into your long -haul network
at Zurich. It seems logical. In theory, yes.
But in practice, you have to look at who is available
to buy. I mean, the good airlines, Lufthansa,
British Airways, Air France, they were already
taken. They were building their own alliances.
They were too big and too expensive, so who was
left to hunt? The sick, the lame, and the dying.
Exactly. They went shopping in the bargain bin
of European aviation. Their first big move was
buying 49 .5 % of Sabina, the Belgian national
carrier. Which I see referred to in the industry
as such a bad experience never again. That was
the running joke among frequent flyers, yes.
And it was a financial basket case. Sabina was
notoriously chronically unprofitable. The Belgian
government and the powerful unions had a complete
stranglehold on it. It had been losing money
for years. And Swiss Air thought they could fix
it. They thought they could impose Swiss... They
poured millions upon millions into a black hole.
And it wasn't just Sabina, though. The shopping
spree continued. They went into France. Oh, the
French adventure. They bought stakes in Air Liberté,
AOM, and Air Littoral. I've never heard of any
of them. Exactly. And that's the point. These
were second tier struggling French carriers with
terrible labor relations, incompatible fleets,
and they were constantly at war with each other.
I was looking at the fleet list for these acquisitions.
It's a logistical nightmare. You're buying airlines
that fly different Airbus models, different Boeing
models. They have different engines. They need
different spare parts. There is no synergy. Zero
synergy. You can't just swap a part from a Swiss
Air MD -11 onto an Air Liberté A320. It doesn't
work. What was I thinking? The CEO at the time,
Philippe Rigasseur, was obsessed with volume.
He was an empire builder. He thought if he just
bought enough revenue, enough market share, that
the profits would eventually follow. But he wasn't
buying revenue. He was buying debt. And the list
goes on, right? It does. They bought into LTU
in Germany, which was a struggling charter airline
with a totally different business model. They
bought into Volair in Italy, LOT in Poland, even
South African Airways. It was completely indiscriminate.
It sounds like a posse scheme. They're using
the flying bank's massive cash reserves to prop
up this zombie network of failing airlines around
them. That's essentially what it was. By the
summer of 2000, the numbers were just horrific.
The Hunter Alliance was losing money at a rate
that is difficult to comprehend. How bad was
it? The documents show that Swiss Air and Sabina
combined were bleeding one million Swiss francs
per day. A million a day. And that's not all.
The French and German investments, LTU and the
others, were losing another million a day on
top of that. So you wake up, have a coffee, and
by the time you're done, Swiss Air has lost two
million francs. Two million francs every single
day. And yet the board let this continue. Yeah.
How do you sit in a boardroom, look at a spreadsheet
with minus two million a day and say, stay the
course? The flying bank mentality blinded them.
It was pure arrogance. They thought they had
infinite resources. They thought. We are Swiss
Air. We are Swiss. We will fix these small mismanaged
airlines. They believe the McKinsey slides over
the reality of their own bank account. Eventually,
though, gravity has to kick in. In January 2001,
Bruxer, the architect of this disaster, is fired.
Right. And they bring in Moritz Suter. Now, Suter
was the founder of Crossair, which was Swissair's
successful regional subsidiary. He was a real
aviation guy and entrepreneur. He was seen as
the savior. The conquering hero returning to
save the kingdom. But he didn't stay long at
all. He lasted 44 days. 44 days. What happened?
He came in. He looked at the books. He saw the
absolute disaster that Brugeser had created.
He tried to immediately restructure the black
hole of the French airlines, got blocked by the
board who were still in denial. And he essentially
said, I'm out. This is unsalvageable. That should
have been the biggest red flag in history. When
the savior runs away screaming after a month
and a half. You'd think so. But they just found
another one. And then they bring in Mario Corti.
The last man. Mario Corti is a truly tragic figure
in this story. He wasn't an airline guy at all.
He was the CFO of Nestle, a brilliant finance
guy. He was brought in to be the ultimate cleanup
man. But by the time he sat in the CDO's chair
in March 2001, the airline was already terminal.
The patient was dead. It just didn't know it
yet. And then, just when you think it can't get
any worse, history decides to kick them while
they're down. We have to talk about Flight 111.
The crash at Peggy's Cove, Nova Scotia, September
2, 1998. An MD -11 flying from New York to Geneva
just falls out of the sky into the Atlantic,
killing all 229 people on board. And the cause
was linked to the brand new fancy entertainment
system they had just installed, right? Yes. Faulty
wiring in the in -flight entertainment system
located in the ceiling above the cockpit sparked
and started a fire. The irony is just... It's
brutal. It's dark. The pursuit of luxury, trying
to offer the best screens, the best first -class
experience, is what caused the fire that brought
the plane down. The lawsuit settlements were
massive. More importantly, it cracked that pristine
image of safety. For the first time, people questioned
if Swiss Air was fallible. Even the flying bank
wasn't 100 % safe anymore. Passenger confidence
started to waver. See, the psychological blow.
Then you have the massive debt load from the
Hunter strategy coming due. And then... September
11, 2001. 9 -11 paralyzed global aviation overnight.
But for Swiss Air, it wasn't just a pause. It
was the final fatal death blow. Explain that.
Because every airline suffered. Sure. But for
a healthy airline like Lufthansa, 9 -11 was a
severe crisis. They parked planes, they cut costs,
they got government loan guarantees, and they
weathered the storm. For Swissair, which was
already burning through 2 million francs a day
just to exist, it was impossible. Booking numbers
just vanished. The cash flow stopped completely.
So that brings us to the final frantic week of
September 2001. This is where the story turns
into a high -stakes financial thriller. It does.
Mario Cordi goes, cap in hand, to the big Swiss
banks, UBS and Credit Suisse, and basically begs
for an emergency credit line, a lifeline to get
them through the crisis. And UBS, specifically
the chairman at the time, Marcel Auspel, says
no. Flat out no. Why? I mean, why let a national
icon fail? This is the flag carrier. This is
Switzerland. From the bank's perspective, they
looked at the books and they saw a bottomless
pit. They argued that lending more money to Swiss
Air wasn't a loan. It was a donation. They didn't
think they'd get it back. They knew they wouldn't.
They didn't believe the business model worked
anymore. They were tired of throwing good money
after bad. The public reaction to that was visceral,
though. I remember seeing news footage of protesters
holding signs calling Auspil. They called UBS
the United Bandits of Switzerland. The Swiss
public felt profoundly betrayed. They couldn't
separate the emotional value of the flag carrier
from the cold, hard math of the balance sheet.
They thought the banks had a patriotic duty.
A duty to save the airline regardless of the
cost. But the banks held firm, which leads us
to October 2, 2001, the day of the grounding.
Walk us through the mechanics of this. Because
it wasn't a planned shutdown. It wasn't an orderly
bankruptcy filing. No, it was absolute chaos.
Cordy had announced a restructuring plan the
day before, but he needed immediate cash, like
right now, to keep the planes flying that day.
For fuel. For fuel, for landing fees, for catering.
The banks stalled on releasing any funds. And
the fuel suppliers at Heathrow, at JFK, and even
at home in Zurich, they saw the news. They knew
Swiss Air was on the brink of collapse. And fuel
suppliers aren't in the charity business. No.
They invoked cash on delivery. They essentially
told the pilots, put the cash on the hood of
the truck or we don't connect the hose. And Swiss
Air literally didn't have the cash on hand. Cordy
claimed at the time they only had about 14 .5
million francs accessible. That wasn't even close
to enough to cover the fuel bill for the entire
global fleet for a single day. So at 15 .45 that
afternoon, a message goes out. Flight operations
are suspended. The stories from the staff on
that day are. Just heartbreaking. I read you
had pilots using their personal credit cards
to try and buy fuel. Yes. Can you imagine the
desperation? You have Swiss Air captains handing
over their personal American Express cards to
try and get enough kerosene to get their passengers
home. But the amounts were just too high. The
cards were declined. In the hotels, the crew
layovers. The hotels kicked the crews out. Imagine
being a flight attendant in Johannesburg or Sao
Paulo. You check into your hotel after a 12 -hour
shift, and the front desk says, sorry, Swiss
Air's corporate credit is no good here. You have
to leave. Unbelievable. Crews were sleeping in
airport lobbies, borrowing money from passengers
to get taxis. It was a total, absolute national
humiliation broadcast live around the world.
Now, there is a massive controversy here, isn't
there, about the missing money? Later investigations
suggested Corti might have been wrong or at least
misleading about the cash position that day.
This is the Ernst & Young report that came out
later. It's a huge point of contention. Years
later, their forensic accountants claim there
was actually around 123 million francs in various
accounts that could have been used that day.
That's a huge difference. 14 million versus 123
million. That's the difference between flying.
and grounding it is now the defense from corti
and the management was that this money was trapped
it was in subsidiary accounts or escrow accounts
or in foreign currencies that couldn't be liquidated
in two hours to pay a fuel guy on the tarmac
at heathrow but to the employees who lost their
jobs their pensions. To them, it looked like
gross incompetence or worse. They felt the grounding
was unnecessary theater, that it was a deliberate
act to force the government's hand. It's still
bitterly debated in Switzerland today. Regardless
of whether the money was there or not, once the
planes stop flying, the trust is gone forever.
You can't just restart an airline after stranding
40 ,000 passengers around the globe. The brand
was dead. The flying bank was officially bankrupt.
Those images of the entire Swiss Air fleet sitting
idle on the tarmac in Zurich, wingtip to wingtip,
they were the tombstone. But a country like Switzerland
needs connectivity. They're a global business
hub. They couldn't just have no national airline.
So the government initiated Project Phoenix.
Which was essentially a shell game, a very, very
expensive shell game paid for by the taxpayer.
So how did it work? They took Crossair, the regional
subsidiary we mentioned earlier, the one founded
by Moritz Suter. It was smaller, but it was technically
still solvent. The Swiss government pumped billions
of francs into it. Then Crossair was used to
buy the good assets of the dead Swiss Air. So
they took the planes, the routes, the valuable
landing slots at Heathrow and JFK. And most of
the staff. Yes. Bad stuff. They left the massive
debts, the Hunter strategy liabilities, the pension
obligations, and all the bad investments in the
old Swiss Air corporate carcass to be liquidated
over the next 20 years. And then they just renamed
Crossair. Exactly. Crossair was renamed Swiss
International Airlines. Or just Swiss for short.
A clean slate. Same planes, same staff, new logo,
no debt. But here is the ultimate crushing irony
of the entire story. The whole point of the disastrous
Hunter strategy, the whole reason they burned
through billions and billions of francs. As to
stay independent. To stay independent and not
merge with a European giant like Lufthansa. And
in 2005, just three years after the new Swiss
launched, what happens? They were bought by Lufthansa.
The very thing they fought so desperately against.
It's a perfect tragedy. They spent their entire
fortune trying to avoid becoming a junior partner
to Lufthansa. And they ended up becoming a wholly
owned subsidiary of Lufthansa, but without the
fortune. It is a Greek tragedy of corporate strategy.
You meet your destiny on the very road you take
to avoid it. There was a trial, wasn't there,
in 2007. The whole bull... All the executives
were dragged into court. The public wanted heads
to roll. They were charged with mismanagement,
making false statements, forgery, damaging creditors,
the works. And the verdict? They were all acquitted.
Every single one of them. I mean, how do you
lose that much money, destroy a national icon,
and get acquitted? The business judgment rule.
The court basically ruled that just because a
strategy is catastrophic, that doesn't mean it's
criminal. They were trying to save the airline.
They failed spectacularly. But stupidity or arrogance
or even just bad luck. isn't a crime in the corporate
code. That must have been an incredibly bitter
pill to swallow for the thousands of employees
who lost their life savings. Their pensions were
tied up in worthless Swiss Air stock. It was
devastating. Many of them lost everything. It's
still a deep wound in Switzerland today. If you
bring up the grounding in a bar in Zurich, you
will still get very, very strong opinions. Before
we wrap this up, I found one bizarre little footnote
in the source material about the brand name.
The name Swiss Air. Who owns it now? What happened
to it? This is one of the weirdest parts of the
story. To prevent the trademark from expiring
due to non -use, the new company, Swiss, had
to license the name Swissair out. To another
airline. Not exactly. They licensed it to a tiny
aviation sports club in the U .S. and for a few
years to a U .S. air taxi operator called Hopscotch
Air. Hopscotch Air. Yeah. They flew small, single
-engine Cirrus propeller planes on short hops
around the Northeast. So for a while, if you
saw the name Swiss Air in the sky, it wasn't
a giant jumbo jet. It was a tiny four -seater
plane flying over New York State. A ghost of
the flying bank. A very, very small ghost. So
after all this, what is the takeaway here? Is
this just a straightforward story about bad management
or is there a deeper, more universal lesson?
I think it's about the profound danger of exceptionalism.
Swiss Air believed it was exempt from the rules
of the market. They believed it because they
were Swiss, because they were rich, because their
brands stood for quality. They truly thought
gravity didn't apply to them. And they ignored
the new reality. They completely ignored the
structural reality of the European market after
deregulation. They tried to use financial engineering
to solve what was, at its heart, a geography
problem. And when the cash from the flying bank
ran out, reality won. Geography always wins.
It really makes you think about the companies
we consider safe or too big to fail today. You
look at some of the tech giants or the massive
banks and think, well, they have too much cash
to fail. But Swiss Air had too much cash to fail
until the day they didn't. Cash burns very, very
fast when you're fueling a bad strategy. And
a 70 -year reputation can burn even faster. If
you want to see what that reputation. what that
hubris looked like at its absolute peak. The
records mention a 1967 film called Follow Me.
It's apparently a perfect time capsule of that
golden age glamour. It's worth a watch. Just,
you know, remember how the story ends. That's
it for this deep dive. We'll see you next time.