SAirGroup may face legal inquiry

SAirGroup, which owns Swissair, is facing legal scrutiny after announcing massive losses Keystone

The Swiss government has said it regrets the substantial losses made by the SAirGroup last year and is examining whether to take legal action against the company. The confederation has a three per cent stake in the troubled group.

This content was published on April 2, 2001 - 16:11

The SAirGroup announced on Monday it chalked up losses of SFr2,9 billion ($1.73 billion) last year.

Commenting on the figures, a spokesman for the transport ministry, Hugo Schittenhelm, said the results were as bad as had been expected. "We welcome the intention of the management to quickly introduce the measures needed to lead the company into a better future."

A working group has been set up ahead of the annual shareholders' meeting on April 25 to check legal aspects, which include the possibility of a special investigation.

Schittenhelm said the Swiss cabinet would have the final say.

His comments came after SAirGroup's new chairman and chief executive, Mario Corti, admitted on Monday that the company's expansion strategy had been a failure.

Aviation analyst, Sepp Moser, told swissinfo that Corti, who took over the helm two weeks ago, was seen as the right man to turn the company's fortunes around.

"His performance was very reassuring. He has built up a lot trust that was squandered in the past few years and he seems to be very honest and straightforward," explained Moser.

In other reaction, Winterthur lawyer Hans-Jacob Heitz, who is behind an association to protect shareholders, agreed that the strategic aims put forward by SAirGroup chairman and chief executive, Mario Corti, were "convincing", but he added there were still questions which remained unanswered.

He did not rule out going ahead with plans to try to force a special investigation against the group's management. He added that the financial officer, Georges Schorderet, did not have the confidence of investors.

One of the unions representing SAirGroup staff, the Public Services Union, said that staff should not now have to pay the costs for the "calamitous" strategy of the past.

"The staff aren't really aware of just how serious the crisis is," said union president Eric Decarro. He pledged that his union would defend its members' interests.

For their part, Swissair pilots have pledged their loyalty to the company by offering to take a five per cent salary cut in return for their collective contracts being extended to the end of 2005.

"We pilots want to make our contribution so that quality jobs can be maintained both on the ground and in the air," commented Markus Jöhl, president of Aeropers, the Association of Swissair Pilots.

As far as SAirGroup's foreign holdings are concerned, Corti said only that he would seek to divest the French regional carrier, Air Littoral - something that French unions described "very serious".

Corti added that a decision about the company's stakes in other airlines, such as Belgium's Sabena, would be taken later.

The Belgian government, which is a shareholder in Sabena, reacted cautiously to the news that no decision had yet been made on the carrier's future.

"The only thing we can do now is to work hard to try to make Sabena profitable," commented the Belgian public services minister, Rik Daems.

However, Belgian unions have said greater efforts from its members are practically impossible. Employees had filled their part of the contract and it was now up to management and the Belgian government to assume their responsibilities, they added.

Analyst Sepp Moser told swissinfo that the problems the company faces with its foreign airline investments is very complex and this will continue to slow down plans to reorganise the group.

And he pointed out that it was not only SAirGroup's foreign holdings that were draining resources. He told swissinfo that Swissair also needed re-organising because it was "inefficient with a far too high cost base".

Moser also said that he doubted the viability of Corti's plans to keep alive the Qualiflyer alliance with Swissair at its head.

"It may not be the end of the Qualiflyer alliance, but it's certainly near and it's only a questions of time until Swissair becomes part of the British Airways-led "oneworld" alliance," explained Moser.

On the financial front, the credit rating agency, Moody's, has downgraded the SAirGroup. In January, Moody's said that one of the reasons it was considering such a move was the significant capital requirement of the company this year.

swissinfo with agencies

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