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Leuenberger seeks backers for national airline

Crossair needs more investment to take on Swissair's flights Keystone

The transport minister, Moritz Leuenberger, has warned business that the government will not act alone to save Switzerland's national airline.

This content was published on October 16, 2001 - 11:23

Leuenberger commented on Monday evening as the search continued for SFr4 billion to ensure the re-launch of a national carrier.

Time is short to find backers for a rescue plan that would see the regional airline, Crossair, absorb around two-thirds of Swissair flights and emerge as the new national airline. Swissair collapsed under a mountain of debt earlier this month.

At the beginning of the month, UBS and Credit Suisse bought Swissair's 70 per cent stake in Crossair and pledged SFr1.4 billion to rebuild the airline sector. But during discussions on Sunday between the leading players, Crossair chairman Andre Dosé said the venture would cost around SFr4 billion.

The plan would see Crossair take over 26 long haul and 26 short haul routes. Dosé says Crossair would have to expand its own equity capital from SFr450 million to around SF2.2 billion if the enlarged airline was to have a sensible capital structure with an equity ratio of around 25 to 30 per cent.

Long-haul funds

In addition, up to SFr1.7 billion will have to be found to keep Swissair operating long-haul flights until the end of next March. Swissair's long-haul licenses cannot be transferred before next April.

And another SFr650 million is needed for payouts to the 9,000 staff made redundant under the terms of the deal.

On Monday, the economiesuisse business association said business leaders would be willing to give up recently obtained tax cuts worth SFr1.5 billion over the next five years to help fund the rescue. The association made the offer after a meeting of 16 top industry leaders on Monday evening.

The Cabinet is to discuss the alternative proposals at its meeting on Wednesday. The government already pumped SFr450 million into Swissair earlier this month to get planes back into the sky. The entire fleet was grounded for two days due to a cash crunch.

Other alternatives put forward on Sunday included a plan which would see Crossair take on only 15 long-haul routes. That would see 14,000 people lose their jobs.

The worst-case scenario would see the whole Swissair fleet grounded with massive job losses and huge social costs.

The Swissair Group's failure is Switzerland's biggest-ever corporate collapse. It fell under a debt mountain that reached SFr17 billion, due in large part to a misguided foreign expansion policy.

swissinfo with agencies

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