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Tuesday, 16 October, 2001, 13:37 GMT 14:37 UK
Companies back Swissair rescue bid
Crossair Saab 340 plane
Regional carrier Crossair aims to save its former parent
Economiesuisse, an association of Swiss firms, has offered to give up government tax concessions to help salvage the national airline, Swissair.

The concessions, worth 1.5bn Swiss francs ($900m) to firms over five years, were approved by the Swiss parliament only last month.

The move follows calls by Swiss president, Moritz Leuenberger for the private sector to contribute to the rescue of Swissair, which sought protection from creditors earlier this month.

Economiesuisse also says it wants to promote the creation of a wide circle of firms to help recapitalise the airline.

Joint effort

Mr Leuenberger on Monday said that Swissair would only get more state funds to keep its planes in the air if the private sector joined in the rescue effort.

"It cannot be that the state alone intervenes here," Mr Leuenberger said.

"The condition is that everyone - business and state - together help us get out of this huge crisis."

At the beginning of the month, Swissair was forced to file for bankruptcy, overwhelmed by the weight of debt accumulated during a disastrous expansion programme.

The global slump in air travel following last month's terror attacks on the US pushed Swissair over the brink.

Mr Leuenberger was speaking ahead of a Cabinet meeting on Wednesday which will discuss the various options for Swissair.

The airline is maintaining operations thanks to a 450m Swiss franc (190m; $276m) government aid package, which is only enough to keep Swissair planes in the air until 28 October.

Deadline looms

In the last few days, Swiss government officials have been meeting bankers to win financial backing for a rescue.

The board of Swissair's former subsidiary Crossair, which now owns 70% of Swissair, has set out three options for the future of the Swiss national carrier and its 72,000 employees worldwide.

Crossair executives have warned that up to 27,000 jobs could go, and outlined the need for multi-billion dollar subsidies.

Three options

Under a rescue deal backed by two Swiss banks - UBS and Credit Suisse - Crossair was split from Swissair and is now set to take over its former parent company.

It will keep some of Swissair's planes and staff, and rebrand what remains of the airline under its own name.

Meeting bankers and government officials on Sunday, Crossair chairman Andre Dose outlined three options for Swissair:

  • Option 1: Crossair takes over 52 of Swissair's plane - half flying European routes, the other half serving intercontinental services. Cost: 4bn Swiss francs (1.69bn; $2.4bn). Jobs lost: 9,400.
  • Option 2: Crossair keeps 26 short-haul jets to fly European routes, and 15 intercontinental planes. Cost: 2.85bn Swiss francs (1.21bn; $1.65bn). Jobs lost: 14,500 jobs.
  • Option 3: Crossair does not take over Swissair. Cost: 2.7bn Swiss francs (1.14bn; $1.65bn) in severance payments. Jobs lost: 27,000.

Crossair will now investigate all three options, and its decision will depend on how much money it can raise from investors and the state.

Swiss government officials, who are meeting on Wednesday to discuss the options, are hesitant to stump up more money, fearing that they might end up footing much of a bill that could reach 4bn Swiss francs.

The bank consortium led by UBS and Swissair has put up 1.4bn Swiss francs so far, but this money has mainly gone to extricate Crossair from the collapse of Swissair Group.

But Swissair needs about $120m every month to keep its planes in the air, and some of its key subsidiaries, in areas such as aircraft maintenance and ground handling, are running out of cash fast.

Rights to routes in doubt

The situation has been complicated by Switzerland's Federal Civil Aviation Authority, which has warned that Crossair may not be allowed to take over Swissair's long-haul routes immediately.

The licences could not be re-assigned to another carrier before March next year, the regulator said.

Mr Dose has already said that Crossair is unlikely to take on Swissair's intercontinental flights for at least five months, which would make government funding even more urgent.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Mark Gregory
"Swissair is probably the country's best known brand name"
See also:

15 Oct 01 | Business
Swissair future on knife-edge
11 Oct 01 | Business
Question marks over Swissair rescue
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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