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Swiss scotches takeover talks

Swiss has denied takeover rumours (Swiss)

Switzerland's national airline, Swiss, has denied holding takeover talks with Germany's Lufthansa and British Airways.

The struggling carrier said on Monday that there was no truth in weekend newspaper reports, adding that it was not up for sale to either of its competitors.

"We had no talks and we have no negotiations with either Lufthansa or British Airways at the moment," said Swiss spokesman Jean-Claude Donzel, reacting to the article in the "SonntagsZeitung".

The newspaper cited three independent sources confirming that Swiss - which reported a SFr1 billion loss for 2002 - had held talks with Lufthansa.

Negotiations reportedly hit a stumbling block because any deal would endanger Munich's position as Lufthansa's hub in southern Germany.

The newspaper also claimed that Swiss chairman Pieter Bouw had assured his German rival that he had the backing of the government if massive restructuring of the airline was required.

According to the SonntagsZeitung, Bouw also approached British Airways with a similar proposal which was turned down.

Lufthansa and British Airways have both denied entering into negotiations with Swiss over a possible buyout.

Industry sceptical

Speculation that Swiss might be in takeover talks with either of its rivals was greeted on Monday with scepticism by some analysts.

"Given the actual size of Swiss, it seems unlikely that it would be taken over by Lufthansa," said Patrik Schwendimann, an aviation specialist at Zurich Cantonal Bank.

Aviation expert Sepp Moser also cast doubt on the feasibility of such a deal, describing it as "legally impossible".

"If Lufthansa - or for that matter any other non-Swiss company - bought a majority in Swiss, then Swiss would lose most of its international traffic rights," Moser told swissinfo.

"The value of the company would be completely diminished the moment it is bought by a foreigner."

Collaboration

Moser said that Swiss stood to gain more by forging cooperation agreements with other airline companies.

He suggested that Lufthansa might be interested in collaborating with Swiss because of the latter's presence in Africa.

"I could see a potential for some sort of rather loose commercial cooperation with Lufthansa, in particular [because of] Swiss's West African network - the most precious part of the network," he said.

Others, however, remain pessimistic about Swiss's ability to keep its head above water in an increasingly shrinking industry.

"Swiss cannot simply survive on its own and the market would not be surprised if it was assimilated into a large company," said Marc Vifian from private bank Lombard Odier Darier Hentsch.

Vifian added that within five years there would only be three European airline companies, and while a takeover might signal the end of Zurich as a hub this would be preferable to Swiss becoming bankrupt.

Hard times

Swiss, however, did confirm on Monday a separate report that top managers at the national carrier were in line to receive bonuses of between two and four months' wages.

Spokesman Jean-Claude Donzel said that the payments formed an integral part of the work contracts of those concerned.

Swiss's financial results for 2002 - its first year of operations - were firmly in the red, with a net loss of SFr980 million ($632 million).

Less than a month ago, André Dosé, the company's chief executive, told shareholders that the airline was planning to reduce its capital and to halve its orders for new planes.

In February, the airline, which was formed after the collapse of Swissair in 2001, announced the loss of 1,000 jobs.

Flight ban

Swiss is set to be dealt a further blow later this week when Germany imposes new restrictions on the number of flights allowed to pass over the south of the country before landing at Zurich airport.

German action comes after the Swiss parliament threw out an aviation accord between the two countries.

Donzel said some 67 flights might be affected by the new restrictions which are due to come into force on April 17.

Swiss said some long-haul flights might have to be re-routed to Geneva and Basel airports.

swissinfo with agencies

In brief

The SonntagsZeitung claims that Swiss has entered into talks with Lufthansa and British Airways regarding a possible takeover of the national carrier.

Swiss has denied the allegations but confirmed a separate report that top managers would be receiving bonuses despite last year's poor financial result.

Swiss made a net loss of SFr980 million ($632 million) during 2002.

Swiss said some 67 of its flights were likely to be affected by Berlin's decision to restrict the number of flights approaching Zurich airport over southern Germany.

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