Switzerland’s national airline, Swiss, says it has secured a long sought-after credit facility of SFr325 million ($258 million).This content was published on September 24, 2004 - 18:31
The closure of the deal brings to an end months of negotiations with an international banking syndicate.
The airline, which has warned it will likely make an operating loss this year, had been negotiating with a consortium of Swiss and international banks for well over a year.
“We are pleased to have concluded this definitive credit [facility] with the banks involved,” said Swiss CEO Christoph Franz on Friday after the agreement had been signed.
"With our enhanced liquidity base, we will now be able to take the steps required to further strengthen our competitive position."
The credit agreement has been concluded for a three-year period.
Spending the cash
Swiss said that SFr180 million of the SFr325 million would be made "directly available" to the airline.
It added that the remaining SFr145 million would initially serve as security on obligations arising from aircraft lease agreements.
Talks with the banks were steered by Halifax Bank of Scotland, which will 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.
News of the agreement comes just over two months 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.
swissinfo with agencies
The SFr325 million ($258 million) credit facility 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
In compliance with the JTI standards