Government may help Swissair if US aids airlines

Swissair's share price continues to decline swissinfo.ch

The Swiss economics minister, Pascal Couchepin, says the government may step in to prop up the ailing carrier, Swissair, if the United States takes part in a financial rescue plan to try to prevent its major airlines from going bankrupt.

Couchepin said any move by Washington to pump cash into US airlines would likely lead to other countries following suit.

“If the United States, which was the first to liberalise air traffic, were to officially support its airline companies, I imagine that it would be very difficult for the rest of the world to argue that their own airlines could be allowed to collapse because of the tide of events, while American competition was receiving state aid,” he told Swissinfo.

His comments came as Swiss aviation expert, Sepp Moser, told swissinfo that Swissair was on the “verge of collapse”.

The Swiss government has until now said it was not prepared to give any financial aid to Swissair, which has been facing a crisis after reporting losses of SFr2.9 billion ($1.81 billion) for 2000 and a loss of SFr234 million in the first six months of the current year.

Sabena fears bankruptcy

On Monday, the Belgian carrier, Sabena – half-owned by Swissair – said the US attacks had worsened its already shaky financial position and that it may not survive until the end of the year.

Sabena, which is trying to carry out a restructuring programme in the face of stiff opposition from trade unions, said it had lost around SFr1.5 million a day as a result of the 30 cancelled flights to North America and a sharp decline in bookings. Transatlantic flights resumed on Saturday.

Couchepin’s comments failed to stem the decline in Swissair’s share value, which at one point was down almost nine per cent on Tuesday. At the close of trade, the share price was down 3.6 per cent at SFr47. On Monday, the group’s share price closed more than 16 per cent lower at SFr48.75.

Since last Tuesday’s suicide attacks against New York’s World Trade Center and the Pentagon, major US airlines have announced cuts in services of around 20 per cent. Continental airlines on Saturday announced it would lay off 12,000 staff and its chief executive officer, Gordon Bethune, warned that as many as 100,000 jobs could be lost in the industry.

swissinfo with agencies