Swissair shares continue freefall
Shares in the aviation conglomerate, Swissair, reached a new low on Monday closing down more than eight per cent to SFr85 ($50.87). The group's share price had already fallen 8.8 per cent last Thursday and continued its decline on Friday, plunging another seven per cent.
Analysts say investors are worried about the company’s debt position and the low cash flows of core operations. Swissair’s financial commitment towards its under-performing German affiliate, LTU, adds to the concern.
Moody’s investor services on Friday cut Swissair’s rating, and the Zurich Cantonal Bank has downgraded the stock to reduce from neutral.
Swissair’s CEO, Mario Corti, had achieved some progress in restoring confidence by managing the company’s exit from loss-making partnerships in France and by reaching an agreement with the Belgian government over the level of its stake in Sabena. But worries remain about Swissair’s debt level, which stands at around SFr15 billion.
To address the problem, Swissair has embarked on a massive disposal of assets. Last Thursday, Corti announced the sale of majority stakes in the ground handling business, Swissport, and in the retail business, Nuance.
1250 jobs are also to go as part of cost-cutting measures.
Swissair had a loss of nearly SFr234 million in the first half of this year compared to a profit of SFr3 million for the comparable period in 2000.
The company posted a loss of nearly SFr3 billion for the year as a whole last year after taking on charges as a result of its disastrous foreign expansion strategy.
Swissinfo with agencies
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