Christian Mandl, co-founder of SkyEurope Airlines which went bust this month, has launched a stinging attack on the hedge fund that took control of the airline after he sold his stake in 2007.
In an interview with EURACTIV, Mandl blames the hedge fund for the demise of the airline and said venture capitalists who take a controlling stake in expanding companies offer a more sustainable source of private financing.
He said he was saddened to see SkyEurope Airlines file for bankruptcy at the end of August and suspend its operations on 1 September, and slammed the main shareholders for not taking a more hands-on approach to saving the company.
Mandl also accused the hedge fund that took control of the airline of installing “incompetent” management and reversing his expansion strategy.
“They decided to implement the exact opposite strategy to the one I had been pursuing: they offered the Hungarian and Polish markets to our competitor Wizz Air, although our Krakow base was our best performer, and started a significant downsizing of the fleet,” he said.
The new owners stopped investing in the company’s future and began to dismantle valuable elements of the company, before allowing the airline to fail because a price could not be agreed with rival firms, Mandl claims.
“Hedge funds are not always the best partners. Some hedge funds have been highly successful in delivering good returns to their investors and usually attract smart people with a strong educational background. These young graduates often have no operational experience but can still do an excellent job trading securities hidden behind their Bloomberg terminals,” he says.
Mandl, who is now setting up a venture capital fund to promote renewable energy initiatives and R&D in Slovakia, says private equity investment is preferable to relying on capital from hedge funds as investors take a more sustainable attitude to business.
“It simply reflects the difference between the financial casino where each player believes that he is smarter than his neighbour and the real economy where the customer experience needs to be consistent, employees need to get paid, and important decisions cannot be postponed,” he said.
In a wide-ranging interview on entrepreneurship, Mandl is also critical of the EU’s efforts to stimulate innovation and support SMEs. He said providing loans and guarantees through commercial banks does not always work, and suggests the culture of mainstream banks makes them ill-equipped to invest in innovative start-ups.
“In my view, investment through venture capital vehicles is more effective,” he says.
According to Mandl, the authorities can help entrepreneurs by providing “technical assistance funds” to help meet the costs of professional services and the protection of intellectual property.
He also said Europeans might be less reluctant to take risks if there were a stronger social safety net, which could help them reintegrate into the traditional workplace should their business fail. A form of “entrepreneurial leave”, similar to parental leave, could make would-be entrepreneurs more comfortable with starting their own business.
Christian Mandl was speaking to Gary Finnegan.