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Government ready to invest in new national airline

Regional carrier Crossair is awaiting the government's decision Keystone

The government says it is prepared to invest in a re-launched national airline but has repeated it will not back the venture alone.

This content was published on October 17, 2001 - 17:40

The transport minister, Moritz Leuenberger, said on Wednesday that government intervention was conditional on business and those cantons with airports also contributing to the new carrier.

He did not say how much the government was willing to spend - the exact amount will be decided on Monday pending the outcome of further talks - but said "huge sums" were involved.

He added that the government wanted Switzerland to preserve long-distance air services from a Swiss hub, and that companies and cantons should contribute to avoid major job losses at Swissair.

"We expect business to recognise its responsibility here," he told a news conference in Bern.

Crossair wants SFr4 billion

The boss of the regional airline, Crossair, which is expected to form the new flag carrier by absorbing parts of Swissair, estimates that SFr4 billion is needed to make the venture viable.

Swissair needs up to SFr1.7 billion to keep flying because Crossair cannot take over its long-haul flights until April next year. A further SFr650 million is needed for payouts to the 9,000 people who would lose their jobs under the plan.

In addition, Crossair says it needs to increase its equity capital from SFr450 million to SFr2.2 billion, which would give it an equity ratio of 25 to 30 per cent.

The government is considering a number of financial options. One is the introduction of a special "Swissair tax" possibly funded through an increase in value-added tax (VAT).

Tax cuts

On Tuesday, the country's main business association, Economiesuisse, said its members were willing to give up SFr300 million a year in planned tax cuts over the next five years to help save the country's airline industry. The government however, wants a clear commitment from the private sector that it is willing to invest in the new venture.

The Swissair Group's failure is Switzerland's biggest-ever corporate collapse. It fell under a debt mountain that expanded to SFr17 billion as the company embarked on a misguided foreign expansion programme.

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