Impasse over Swissair salvage plan

The Swissair salvage plan has failed to take-off Keystone

After more than five hours of talks in Zurich on Saturday, government ministers, aviation experts and top business managers failed to iron out a financial plan to salvage the collapsed national carrier, Swissair.

The sticking point was the question of who would foot the bill for the estimated SFr1 billion ($610 million) set up costs for the new national airline, Crossair.

According to the Swiss newspaper, the “SonntagsZeitung”, the government said it would provide more than half of the required SFr940 million ($572 million) start up funds, agreeing to pay SFr500 million ($304 million).

In return, government representatives would have a place on the management board and have the power to call a no-confidence vote against Crossair’s chairman, Moritz Suter and CEO, André Dosé.

No agreement reached

However, no agreement could be reached on how to fund the remaining SFr440 million ($268 million) shortfall with members of the business community and the banking world stopping short of committing to the financial package.

The Swiss French-language newspaper “dimanche.ch”, reported that a list of names and telephone numbers was given out at the end of the meeting, so that all those concerned could communicate with each another on Sunday to try and reach a last minute agreement.

Despite negative coverage in the Sunday press, with the “Sonntagsblick” dubbing the meeting “The Swissair Cabaret”, Daniel Eckermann, a spokesman for the Swiss Finance Ministry, remained upbeat about Saturday’s achievements.

“There was a really constructive atmosphere during the meeting,” he said drawing attention to the collective desire to find a way out of the Swissair debacle.

“There has been progress,” he added, “but the final solution is not guaranteed.”

Opinion poll

According to an opinion poll run by the “SonntagsZeitung” and the German speaking television station, DRS, public support for partial government funding of the new Swiss airline is riding high at 62 per cent, with only 33 per cent against any state intervention.

However, the poll carried out from Wednesday to Saturday last week does come with conditions. Twenty-nine per cent of those in favour of government funding say no more than SFr500 million should be given to Crossair with a further quarter of people saying state funding should not exceed SFr1 billion.

SFr4.5 billion total costs

The total estimated cost of transforming Crossair into the new Swiss carrier is put at SFr4.5 billion ($2.75 billion), with government coffers providing around 60 per cent of the required funds.

This is made up of SFr940 million immediate set-up costs, SFr1 billion to keep Swissair’s long-haul network in the air till March 2002, SFr 450 million bridge credit from the government to put an end to Swissair’s grounded fleet in early October, and SFr 2.3 billion from industry and commerce to get the new Crossair up and running.

The national airports in Geneva, Zurich and Basel have also said they need SFr500 million ($305 million) in financial assistance.

The deadline for the finalised Swissair salvage plan is Monday, with a government decision expected around midday.

Under the current rescue plan dubbed “Phoenix”, Crossair would absorb 52 of Swissair’s aircraft, 26 for medium haul routes and 26 for intercontinental travel. This would enable Switzerland to maintain a large number of its routes, giving the country a viable airline infrastructure.

by Sally Mules with agencies