Swiss secures agreement with banks for extra cash
Switzerland’s troubled national airline says it has secured an agreement in principle with an international banking syndicate for a SFr325 million ($258 million) credit facility.
But Swiss said several third parties still needed to give their consent before the deal could be finalised.
The airline, which has warned it will likely make an operating loss this year, has been negotiating with a consortium of Swiss and international banks for well over a year.
“We are very pleased that we have been able to sign a term sheet for a credit facility with the banks involved, following intensive negotiations,” said Swiss CEO Christoph Franz in a statement released after the markets had closed on Friday.
Swiss Finance Minister Hans-Rudolf Merz welcomed the news that the carrier had reached a working agreement with the banks.
“I have been hoping and waiting for this for a long time,” said Merz.
The Swiss government owns a 20.3 per cent stake in the country’s national airline, which took to the skies in 2002 following the collapse of Swissair.
Five banks
Swiss said the talks had been steered by Halifax Bank of Scotland, which is set to provide SFr100 million, and Barclays Capital, which has offered SFr55 million.
The airline said UBS and Credit Suisse had both offered SFr75 million, while Zurich Cantonal Bank will provide SFr20 million. All three Swiss banks are major shareholders in the airline.
Swiss added that it would use part of the credit facility, to be paid in two instalments, to “discharge existing liabilities”.
Franz said he was “confident” that the carrier would soon be able to conclude a definitive agreement with the banks.
“With a strengthened liquidity base, we will then be able to implement the necessary steps to further strengthen our competitive position in the aviation market.”
First profits
News of the agreement in principle comes just over a month after the airline posted its first quarterly net profit.
Swiss ended the second quarter of 2004 with a net profit of SFr45 million, although its figures were boosted after a legal settlement in France injected SFr68 million into its accounts.
The carrier is hoping to reduce annual costs by SFr1.6 billion and has axed more than 3,000 jobs over the past two years.
It has also reduced its fleet from 132 to 85 aircraft and drastically cut back its short- and long-haul route networks.
Earlier this year rising oil prices forced Swiss to issue a warning that it was likely to miss its target of breaking even by the end of 2004.
Swiss shares, which are held by a relatively small number of investors, rose by 18 per cent on Monday to end the first trading day of the week at SFr9.32.
swissinfo with agencies
The SFr325 million ($258 million) credit facility, which still needs the approval of several third parties, divides up as follows:
Halifax Bank of Scotland: SFr100 million
UBS: SFr75 million
Credit Suisse: SFr75 million
Barclays Capital: SFr55 million
Zurich Cantonal Bank: SFr20 million
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