Shares in the troubled aviation conglomerate, SAirGroup, closed down by nearly 14 per cent on Monday as the markets gave their verdict on Friday's mass resignation of the board of directors.
The share price went into a tailspin with rumours mounting that the company's financial position is even worse than expected. Monday's closing price of SFr174 per share was the lowest in five years.
SAirGroup expressed concern at the market reaction, but said that it was understandable given recent media reaction to the problems within the company. It said there were no plans for a share sell-off.
Shortly before Monday's close, officials at the Swiss Stock Exchange confirmed that they had opened an investigation into the resignation of the newly-appointed head of the airline division, Moritz Suter. Suter resigned unexpectedly last Wednesday after just 44 days in the job.
Differences with SAirGroup's board over structure and his failure to get his own way over decision-making were cited as reasons for his premature departure.
Meanwhile, speaking at a press conference in Bern on Monday, the Swiss president, Moritz Leuenberger, made it clear that the government has no plans to bail out the group.
He emphasised that the government holds only a three per cent stake in SAirGroup and therefore would only have "limited influence" on the company's financial status.
However, the government has announced that it plans to form a working group, involving the transport, finance and economics ministries, to "analyse SAirGroup's annual results".
There has been some speculation that SAirGroup might release its annual results earlier than anticipated. The results conference is scheduled for April 2 but is likely to be brought forward.
It's expected that SAirGroup will announce hefty losses in the past year. Media reports predict that losses could total SFr2.5 billion, and analysts have warned that the company needs an SFr1 billion credit injection to avoid bankruptcy.
SAirGroup spokeswoman, Beatrice Tschanz, denied the company was facing bankruptcy, but conceded that it had recorded "unsatisfactory annual results".
As speculation mounted that the banks might be called in to prop up the company - which this year celebrates its 70th birthday - group chairman Eric Honegger admitted that it was holding intensive discussions with the banks.
Adding to SAirGroup's financial woes is the news that it may now face lawsuits for failing to inform shareholders adequately of risks taken when it acquired stakes in several loss-making airlines abroad.
The Winterthur-based law firm, Hans-Jacob Heitz, announced it was looking into the issue and could file liability suits against members of the outgoing board.
The board on Friday decided to take collective responsibility for SAirGroup's troubles by announcing its intention to resign. Five board members are to step down at the Annual General Meeting on April 25, while four others, including Honegger, will leave by spring 2002.
The board is also to be slimmed down to seven members - three of whom will be appointed in April.
With attention now turning to who will succeed Honegger, Mario Corti, the only board member not to step down, is considered the prime candidate.
Corti is currently financial director of the Swiss food giant, Nestlé, and has held top positions at Switzerland's National Bank and the federal office for foreign trade.
Other potential successors are André Kudelski - a board member of the Kudelski Group, which specialises in digital technologies - and Armin Meyer, head of the Swiss chemicals group, Ciba.
The board's decision to step down is the latest in a series of high-profile departures at the troubled group, which in January called a halt to its strategy of expansion, following mounting losses among many of its affiliates, including Belgium's Sabena.
Outside the parliament's spring session in Lugano on Monday, a leading member of the Social Democratic Party, Franco Cavalli, called for an urgent debate in parliament on the crisis surrounding the group.
Cavalli said all the facts about the financial situation of SAir "had to be put on the table" and he called on the group's former board members to answer for the financial crisis.
Meanwhile, leading members of the Christian Democratic Party and the Radical Party deplored the crisis and rejected the idea of any financial intervention by the government.
The Radicals welcomed the resignation of the current board of directors while the Christian Democrats said they hoped the government would use its influence to see that a new board of directors will be in place soon.
swissinfo with agencies