Difficult birth for new airline

Swissair fallout set to dominate once more Keystone

The Swissair story will still hold a dominant position in the week ahead, but there will also be plenty of chances to gauge how the Swiss corporate world is coping with the global slowdown.

Continued discussion over the future of the new Swiss national airline will once more dominate the news as the pilot committee continues its mission of launching a new Swiss airline.

Although a buyer was announced last week for the Swissair Group’s IT subsidiary Atraxis, a solution still needs to be found for the two other Swissair subsidiaries – the SR Technics maintenance company and the ground-handling unit Swissport – which face a cash crunch.

Evidence of slowdown

On Tuesday Switzerland’s largest bank UBS reveals its third quarter numbers. These should give a keen indication on how the global economic slowdown is affecting the financial sector.

Investors have also worried that UBS customers irked at its role in rescuing the Swiss airline industry would pull funds from the bank.

However, last week executive board president, Luqman Arnold, told a lunch meeting that the outflow of funds was probably in the “triple digit millions” of Swiss francs. This represents only a tiny fraction of the money UBS manages for clients.

But UBS will be affected by the global regulatory clampdown to combat terror funding, which has sent bank compliance costs soaring and will push up fees for clients and further hurt revenues already suffering in the economic downturn.

Medica meltdown

Market attention will turn towards Sulzer Medica on Wednesday as it uncovers its third quarter performance.

Traders will look for news on how the company expects to deal with the hundreds of potential lawsuits it now faces in the United States.

At the end of October a US court allowed some of the hundreds of potentially costly liability lawsuits against the company to proceed, undermining stock market confidence that the firm can survive the financial fallout from faulty knee and hip implants.

Swiss Re in spotlight

Swiss Re, the world’s second biggest reinsurance group, will be in the news come Thursday when its new shares, issued as part of the company’s capital increase, begin trading.

Swiss Re, one of the main insurers involved in the payout for the World Trade Center, destroyed in the September 11 terror attacks on the United States, is at the centre of a legal wrangle.

Larry Silverstein of Silverstein Properties Inc, which holds the World Trade Center lease, wants to claim twice on his company’s insurance policy for a total payout from all reinsurers of $7 billion, on the grounds that the destruction of the twin towers constitutes two separate attacks.

Swiss Re has asked the courts to rule that the attack was one event, limiting its portion of the payout to $750 million.