Swissair to sell LTU stake for one euro

LTU stake to be sold for one euro Keystone

Collapsed flag carrier Swissair plans to sell its stake in loss-making German charter unit LTU for a symbolic one euro in a deal that will end its commitments but cause a further huge loss.

Administrators at the Swissair Group said on Friday that the deal could allow a restructuring of LTU and give it another lease of life while Swissair Group, some of its units and its Sabena ally are being wound up as the first casualties in the ailing European airline industry.

Karl Wütrich, the court-appointed administrator of the Swissair Group and five of its subsidiaries, said a Swiss debt restructuring judge had approved the sale of Swissair’s 49.9 per cent stake in a finance firm that owns LTU to co-owner Rewe of Germany for one euro.

Claims renounced

At the same time of the sale, all mutual claims between the companies will be renounced with the exception of Swissair Group’s guarantees to third parties such as aircraft leasing firms.

Wütrich said total losses for Swissair firms from the contract are estimated at SFr500-700 million ($300-$422 million). But the deal avoids potential losses of SFr1.28 billion.

LTU, with Belgium’s now bankrupt Sabena and French associates AOM and Air Liberté, were the nails in the coffin of the once-proud Swiss airline. Swissair overreached itself in a foreign buying spree and was brought down under a heavy debt load by the drop in traffic after the September 11 attacks.

Wütrich said it was highly likely that the parent company and several of its subsidiaries needed to be liquidated or declared formally bankrupt when their preliminary protection from creditors runs out next month.

The two houses of the Swiss parliament are set to approve on Friday and Saturday the federal government’s contribution to a SFr4.3 billion national airline industry salvage plan.

swissair with agencies