Crossair takes fright at prospect of absorbing Swissair

Crossair is due to take over 52 aircraft from Swissair Keystone Archive

Switzerland's regional airline, Crossair, says it is far from ready to absorb parts of the collapsed Swissair to form a new flag carrier.

The warning came as the government held talks with banks and private industry to try to raise enough cash to press ahead with a salvage plan under which Crossair is to acquire 26 long-haul and 26 short-haul Swissair planes.

Crossair was due to decide on Friday whether it could absorb the aircraft, but postponed the decision in the absence of any clear financing guarantees.

“We will wait until after the cabinet meeting [on Monday],” a Crossair spokesman said. “But time is getting very tight. We have to do an awful lot of things to take up those planes.

“We have to decide where to base the planes, which people to hire, where they have to live. We also have to weld that into one company while at the moment big cultural differences exist.”

Bankruptcy warning

A court-appointed administrator for the Swissair group and several of its subsidiaries warned on Friday that the companies would almost certainly go bankrupt, unless financing was found to support the rescue plan.

The Swiss government on Thursday said after a special meeting in Bern that a financial solution was possible and it was willing to take a stake in a revamped Crossair integrating parts of Swissair.

However, it earlier made it clear that would only do so if the private sector provided a large chunk of the SFr4 billion ($2.44 billion) needed.

Aftermath of September 11

The Swissair group and five subsidiaries obtained a debt moratorium earlier this month, after the sharp decline in air transport in the aftermath of the terror attacks in the United States proved too much for the embattled Swissair Group.

The group recorded a loss of SFr2.9 for the year 2000 after the management strategy of investing in airlines abroad proved a huge failure.

Switzerland’s two big banks, UBS and Credit Suisse, sponsored a rescue package on October 1, which foresees the transfer of two thirds of Swissair’s airline operations to Crossair in a plan called “Operation Phoenix”.

As part of the deal, now totalling SFr1.5 billion, the banks bought Swissair’s 70.4 per cent stake in Crossair.

Emergency cash

The government also put up SFr450 million in emergency cash for Swissair after the fleet was grounded for two days because it could not pay for aircraft fuel and landing fees.

A government-led task force needs to find enough finance to re-capitalise Crossair so that it can operate a much larger fleet.

More money is needed to allow the rump of Swissair to operate a reduced number of inter-continental flights during the winter timetable from October 28 to the end of March, when Crossair is due to take over these services too.

Crossair spokeswoman Diane Müller-Tanqueray said that of the SFr4 billion needed for the revamped airline, about a half was required for the maintenance of Swissair services, while the other half was earmarked for Crossair’s re-capitalisation.

According to a provisional timetable of the new airline, 38 inter-continental destinations would be served, 37 from Zurich airport and one from Geneva, which would also serve 20 European cities.

The long-haul flights from Zurich would be operated by the 26 jets taken over from Swissair, which include MD 11 and Airbus 330 aircraft.

Nestlé ready to help

In a related development, the world’s biggest food concern, Nestlé, said on Friday it was prepared to come to the rescue of Swissair, provided other Swiss companies chipped in.

“If there is a realistic and economically viable and long-term project for a Swiss airline, then Nestlé has a significant interest in joining,” chief executive officer Peter Brabeck told Reuters. However, he declined to give figures.

The company’s former finance director, Mario Corti, was despatched to Swissair in March to try to salvage the group.

swissinfo with agencies