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Bern rejects investment in new airline

Bern has joined Solothurn in refusing to invest swissinfo.ch

Bern says it will not invest in a new national carrier, making it the second canton to refuse.

This content was published on January 15, 2002 - 13:50

Bern's refusal to make a proposed SFr11 million ($6.6 million) investment in the airline, being built around regional carrier Crossair, is seen as a blow to the new company's credibility.

Bern said any participation in the project would be a negative signal at a time when the canton was trying to sort out its finances. Last November, the cantonal government decided on a tight fiscal policy to try to reduce its debt.

In its statement, Bern also said that it had already in the past refused requests from other airlines such as Air Engadina that had found themselves in financial difficulties. It said such risky investments were not the role of public institutions.

Crossair said it regretted Bern's decision but said that it would not affect the "Phoenix" plan to take over 52 Swissair planes at the beginning of April. The federal government echoed Crossair's regret and said it would have preferred all cantons to contribute.

Second canton to refuse

Bern is the second canton to refuse to participate. Canton Solothurn has already turned down a request for nearly SFr3 million.

Although the sums involved are relatively small, analysts see the decisions as a blow to the company's credibility. It also puts in doubt the contributions from other cantons, especially those in the French-speaking part of the country.

On Sunday, voters in Zurich backed a SFr300 million investment by their canton. Crossair said it would be unable to take on as many long-haul routes if Zurich voted "no" and that around a thousand jobs were threatened.

Crossair was counting on a SFr400 million investment from the cantons in addition to the SFr2.4 billion already raised by the government, banks and private business.

Name for new airline

Meanwhile, the country is still waiting to find out what the new airline will be called.

Crossair's board met on Monday to discuss the company's new identity but no announcement has been made. A company spokeswoman said on Tuesday that a decision has been taken but that lawyers were now checking that the name had not been registered elsewhere. The new brand is expected to be revealed later this week.

Most analysts expect the airline's name to involve some combination of the words "Swiss" and "air" possibly: Air Swiss or Swiss Airlines. More fanciful are suggestions that the airline could operate as "Mountain Air" or "Phoenix Air".

Commercial and legal considerations make it highly unlikely that the new airline will operate as Swissair. The brand - once a hallmark for quality and punctuality - was seriously devalued by the two-day grounding of the fleet last October. There are also fears that creditors may pounce on the new company if it were to bear the same name.

It is thought that two advertising agencies are in the running to handle the expensive marketing campaign to launch the new company. Some industry experts have estimated the cost at around SFr40 million.

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