Government and industry join forces to save Swiss airline

The new carrier is to build on Crossair's foundations and will absorb much of Swissair's planes and crews swissinfo.ch

Government and business are to fund a SFr4 billion plan to build a new national carrier for Switzerland from the remains of Swissair.

In a long-awaited decision on Monday, the cabinet came out in support of a rescue plan under which two-thirds of Swissair’s planes and routes are to be absorbed by the regional airline Crossair, to form a new flag carrier.

“We are happy and relieved that this effort has succeeded,” said the president Moritz Leuenberger.

Under the financing package, worth SFr4.24 billion ($2.65 billion), the government will provide SFr1 billion as a bridge financing for the old Swissair to allow the rump of the company to continue a scaled-down long-haul network until April, when the routes are to be transferred to the new airline.

The finance minister, Kaspar Villiger, said the state’s contribution would be financed by increasing the budget deficit, rather than raising taxes, as had been previously suggested.

Threat to Crossair

In early reaction to the deal, aviation analyst Sepp Moser said it was far from ideal because it would “keep Swissair alive artificially – although the company is clinically dead already – and Crossair would have to grow by more than 150 per cent in a few months”.

“I would not be surprised if Crossair disappeared in one or two years, because the company is in grave danger now.”

He added that the entire process had taken place in a very “emotional atmosphere” and that sound business reasoning had been largely put to one side in the attempts to find a solution to the crisis.

“Most of the decisions were based on emotions, and on the basis of heated, illogical pressure. Everyone was under pressure to give money and to support this concept.”

However, trade unions showed their contentment over the new deal. Daniel Vischer, spokesman for the public service union, said he appreciated the financial support, however, it was not enough.

He emphasised that it was important to “weld together” the two airlines and conclude co-operation contracts.

Kapers and Aeropers, the unions for cabin crew and pilots, said they were relieved by the deal and that a fair solution for all staff must now be found.

Job losses

Announcing the decision, the president Moritz Leuenberger admitted job losses would be severe. However, they are expected to be substantially lower than the tens of thousands that unions had warned would be lost if Swissair was allowed to go bankrupt.

The rescue plan foresees Crossair taking over 26 European routes and 26 long-haul routes from Swissair. Crossair would run the European flights from the end of October, before taking over the long-haul planes and crews from April.

Swissair was placed under protection from creditors on October 5, after the sharp drop in air travel in the wake of the September 11 attacks, crippled the already cash-strapped group, which has debts of some SFr17 billion.

The government has already pumped SFr450 million into the airline after it was grounded at the beginning of the month for two days over fears that it could not pay its bills for fuel and landing fees.

by Jonas Hughes