Government to decide on state aid for successor to Swissair

After weeks of waiting, the future of Swiss aviation should be decided on Monday Keystone

The government is on Monday to decide how much to contribute to a SFr4 billion plan to create a new national airline, following the collapse of Swissair.

The decision is expected after a weekend of high-level talks among the government, Swiss business leaders and cantonal authorities.

A finance ministry spokesman on Sunday said there were “strong signals” that an accord could be reached to finance a new airline based around the regional carrier, Crossair, and incorporating some of the remains of Swissair.

The government, which has already given SFr450 million to keep Swissair flying, has said it is prepared to pay out more public money, provided that Swiss business also gives cash to the rescue efforts.

The plan thought most likely to be adopted, “Operation Phoenix”, foresees Swissair’s sister airline, Crossair, taking over 26 medium-haul jets and 26 long-haul aircraft to cover about two-thirds of Swissair’s route network.

“There are still questions to be resolved, but progress has been made,” said finance ministry spokesman Daniel Eckmann on Sunday, adding that no further information would be given until the government’s decision.

On Monday, canton Zurich indicated that it was willing to put up SFr300 million for the new airline, provided the federal government and business contributes as well. The city of Zurich said it would add SFr50 million, and the two Basel cantons said they would jointly stump up SFr31 million.

The pledges come after the Nestlé food group on Friday said it would be willing to invest if other companies did the same.

Zurich Cantonal bank, the third largest bank in Switzerland, has already put up SFr25 million.

Strong public backing

An opinion poll at the weekend in the SonntagZeitung newspaper showed that 61.3 per cent of Swiss thought the government should give further financial aid to a new airline, but only 27.8 per cent wanted it to take a majority stake in a new company.

Government officials and political party leaders have warned that failure to find a replacement for Swissair would deal a severe blow to the country’s reputation as a place to do business.

However, a large headache for Swiss firms has been whether to spend shareholders’ money on a risky venture.

The head of canton Zurich’s promotion efforts, Stephan Kux, told swissinfo that the grounding of Swissair planes for two days earlier this month and the subsequent damage to Switzerland’s image should not be exaggerated.

“We do not see for the moment that investment is being cancelled or that foreign companies are leaving Zurich or Switzerland,” he said.

“But in the medium term, if we do not have intercontinental connections, I could see certain consequences on investments,” he added.

SFr2 billion expected from government

The total estimated cost of transforming Crossair into the country’s new flag carrier is put at SFr4 billion, with the government believed to be willing to put up about a half of the required funds.

The plan foresees Crossair flying Swissair’s European routes from Sunday when the international aviation winter season comes into force, and operating the bulk of Swissair’s long-haul routes from next April.

This means that Swissair needs SFr1 billion to keep running long-distance flights until the end of March, when the summer season begins. If the airline was unable to maintain its services until then, Crossair could lose the rights to them.

A court-appointed administrator of the Swissair group and several subsidiaries has said that if financing for the rescue plan was not finalised on Monday, all the companies concerned would face bankruptcy.

If the rescue deal is finalised, it is believed that the former Credit Suisse chairman, Rainer Gut (now at Nestlé) would chair a working party to oversee the rebuilding of the airline.

swissinfo with agencies