SAirGroup shares skid as legal worries mount
Shares in aviation conglomerate, SAirGroup, fell more than four and a half per cent on Tuesday, amid mounting worries that the group's huge losses in 2000 may have legal consequences for its directors.
SAirGroup shares fell as low as SFr102 as the markets reopened after the Easter break returning to levels last seen in January 1993.They then recovered in afternoon trading to close at SFr113.
Analysts said newspaper reports that the Swiss government would back a special audit into how the company ran up a SFr2.9 billion ($1.69 billion) loss in 2000 contributed to the steep fall.
Swiss economics minister, Pascal Couchepin, and the president, Moritz Leuenberger, have said the SAirGroup board must take responsibility for company's dire financial situation, despite the fact that all but one of the directors announced they were stepping down last month.
The Swiss cabinet is set to announce on April 25 what it intends to do about the aviation group's finances and earlier management crisis, but it appears that a decision has already been made.
In an interview in the Sunday edition of the French Swiss newspaper, "Le Matin", Couchepin said it would be completely illogical to free the management from any responsibility for the financial situation of the troubled group.
He went on to say that he had a number of questions for the group, which he would ask at the meeting. He would then decide if the matter was a case for the courts.
When asked about the monopoly which was granted to Swissair, one of the company's owned by SAirGroup, Couchepin admitted it had been a mistake.
"We should have freed up the market place before 2008," he said. That way Swissair would have had to face competition and would have needed to polish up its act and make its business practices more efficient.
Couchepin did, however, remain optimistic about the company's future. "It has a strong brand name, a competent workforce and an established customer base."
The Swiss President, Leuenberger, reiterated Couchepin's words in an interview in the Swiss German Sunday newspaper, "SonntagsBlick".
Leuenberger said that in the current environment the former management had to be accountable for the company's poor perfomance but like Couchepin he added that a full inquiry was needed to understand if criminal proceedings were necessary.
Their comments come after Zurich's director of public prosecutions, Hanspeter Hirt, opened an investigation into the airline conglomerate following last year's massive losses. The probe could lead to criminal charges being brought against the company.
Hirt told swissinfo that the inquiry would focus on the group's presentation of its profit and loss account and would determine whether it gave an accurate picture of the real situation the company was facing.
Hirt said that they needed to establish if there had been a deliberate concealment of information in order to proceed with criminal charges because negligence alone was not punishable by the law.
On April 24, SAirGroup executive chairman Mario Corti will unveil the outlines of a new Swissair Group and announce decisions on the future of three French airline subsidiaries which are costing the company SFr80 million each month.
swissinfo with agencies
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