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Thursday, 11 October, 2001, 13:09 GMT 14:09 UK
Question marks over Swissair rescue
Swissair plane
Swissair is flying again, but with a much reduced schedule
by Emma Jane Kirby in Geneva

Crossair, the regional airline set to take on what remains of collapsed carrier Swissair, could soon itself be in trouble, a bank has warned.

While Swiss newspapers are full of rumours about financial difficulties, Crossair has shut down its media operations until Monday, warning that it will not confirm or deny anything until next week.

The Tribune de Geneve asks: "The new Crossair: a stillborn company?" Its front page carries a huge cartoon showing a Crossair plane taking off from a runway - the Tallinn clothed in a much darned sock, from which thousands of coins and Swiss franc notes are leaking from a hole in the toe.

"Crossair desperately searches around for billions more to get off the ground" warns Le Temps, and the Zurich based daily paper "Blick" reports that at least $2.5bn are needed for Crossair to take over the remains of bankrupt Swiss flag carrier Swissair.

UBS, one of the banks involved in the bail-out of what remains of the Swissair empire, warned that Crossair was short of cash and facing difficulties.

In a statement, the bank said that Crossair would need " a multiple" of the $860m provided by UBS and its partner Credit Suisse, if it was to take over Swissair's commitments.

Stranded passengers

Meanwhile, Sean O'Dowd, Direct Sales training manager at Crossair, said no decision had been made on what to do about passengers with Swissair tickets for flights after the end of this month.

"We can't give them any decision at all," said Mr O'Dowd.

"We can't say yes they can fly or no they can't. Its a very difficult situation. We're just asking passengers to be patient and to call us back nearer the end of October."

Protection from creditors

Swissair, meanwhile, has been granted protection from creditors in the United States and Canada and can now resume flying at least some of its North Atlantic routes.

The company - which collapsed nine days ago - hopes to run just over half of its US flights until the end of the month.

What remains of Swissair will then be folded into its former subsidiary Crossair.

One of the banks involved with Swissair says it's received an approach from Texas Pacific Group which specialises in turning around failing companies, having previously worked with Continental Airlines.

Swissair has so far refused to confirm the reports.

Protection from creditors

A week ago Swissair had filed for protection from its creditors in North America and Switzerland.

The carrier had been brought to the brink of bankruptcy by a disastrous expansion programme.

When passenger numbers slumped after the terror attacks in the United States, finances were finally stretched too far.

During its battle for funding, Swissair was obliged to ground its aircraft for two days.

The Swiss government hopes that what remains of Swissair can be saved through a $860m rescue plan organised by Switzerland's two biggest banks, Credit Suisse and UBS.

They bought Swissair Group's 70% stake in one of its subsidiary, the regional airline Crossair.

Crossair in turn will take over two thirds of Swissair's flights on 28 October.

Until then Swissair will continue to fly 60% of its regional flights and 70% of its long haul flights, thanks to a bail-out from the Swiss government of some $250 million

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Handelszeitung editor Kurt Speck
"Texas Pacific...have been involved in a lot of turnaround work"
See also:

08 Oct 01 | Business
Banks blamed for Swissair failure
09 Oct 01 | Business
Swissair cuts 9,000 jobs
11 Oct 01 | Business
KLM talks up alliances
05 Oct 01 | Business
State warned against buying Swissair
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