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Monday, 30 July, 2001, 10:07 GMT 11:07 UK
Pilot rescues French airline
AOM and Air France aircraft
A former Air France pilot will now run AOM/Air Liberte
A French tribunal has ruled out the break-up of loss-making airline AOM/Air Liberte, instead approving a takeover bid led by a former Air France pilot.

The Holco group, led by Jean-Charles Courbet, beat off a rival bid from AOM managing director Marc Rochet.

The decision obliges Swissair, which owns nearly half of AOM/Air Liberte, to provide 1.3bn French francs ($174m; 122m) to give the airline a new start.

The decision "concludes Swissair Group's orderly withdrawal from our airline participations in France," Swissair chairman and chief executive Mario Corti said in a statement.

In early trading in Zurich, Swissair shares were up nearly 6% on the news.

AOM/Air Liberte's future has been uncertain since last month when it was put in the hands of administrators.

Last year, the airline lost 3bn francs.

A tough challenge

The dominance of state-owned Air France has squeezed margins on AOM/Air Liberte's domestic routes.

This has sparked concern that AOM/Air Liberte may never prove viable.

But strong government pressure for a rescue bid - prompted by the need to ensure competition on routes between France and its overseas territories - has raised hopes that the firm may benefit from state support.

The government has already voiced approval of the tribunal's decision.

On top of the 1.3bn francs cash contribution to the restructuring of AOM/Air Liberte, Swissair will refund 200m francs for outstanding tickets, and will also bear the costs of cheaper lease conditions for four Airbus 340 planes by subsidiary Flightlease.

Holco plans to keep 3,000 of the current 5,000 employees, more than under any serious competing bid.

Earlier this year, AOM/Air Liberte's schedule was severely disrupted by a series of strikes in protest at a management-led restructuring plan, which could have led to 1,300 job losses.

See also:

15 Jun 01 | Business
French airline files for bankruptcy
17 Jul 01 | Business
Rescue deal for Sabena
03 Jul 01 | Business
Battling Sabena owners 'go to court'
26 Apr 01 | Business
New finance boosts Swissair
25 Apr 01 | Business
SAir boss faces angry shareholders
23 Jan 01 | Business
Swissair chief steps down
22 Jan 01 | Business
Sabena rescue faces EU probe
24 Sep 00 | Business
BA turns spotlight on Swissair
20 Feb 01 | Business
French carriers hit turbulence
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