Swissair grounds flights as suppliers cut fuel deliveries

The effects of Swissair's demise are starting to be felt

Swissair has grounded all its flights, after fuel suppliers refused to deliver, and London's Heathrow airport impounded two planes over what it said was the Swiss firm's failure to pay landing fees. The Swiss president, Moritz Leuenberger, described the situation as a "disaster" and blamed the Swiss banks, UBS and Credit Suisse, for not doing enough to keep Swissair flying.

This content was published on September 25, 2002 - 18:07

Swissair Group said in a statement that it was suspending all Swissair flights as of Tuesday because "Despite intensive talks during the entire day, it was not possible to secure the liquidity necessary for the daily business and safe operations."

It added that no decision had been taken about if and when flights would resume. The company said planes already in the air would proceed to their destinations but return to Switzerland as soon as possible.

It said it regretted the inconvenience caused to passengers and staff, and warned that the job cuts may be more severe than those announced on Monday when it said 2,650 jobs would go worldwide, 1,750 in Switzerland.

The suspension of flights came as Swissair told passengers at Zurich airport that it did not have access to fuel. Supplies to Zurich have been cut by the oil companies, BP and Shell, which said the airline had failed to pay for Tuesday's fuel in advance.

In London, the airport authorities impounded two Swissair planes. They say the planes will not be released until the airline pays overdue fees amounting to some £300,000 (SFr720,000).

A Swissair employee, who did not want to be named, said flight personnel waiting to return to Zurich from a destination abroad had been drawing money in case the hotel where they were staying demanded a cash payment.

Business as usual at Crossair

Flights operated by Swissair Group's regional carrier, Crossair, were operating normally, according to spokesman, Andreas Schwander.

Crossair has been largely unaffected by the months of turmoil at Swissair, and continues to operate profitably.

It is to be spun off as a separate airline on October 28, when it will take over two-thirds of Swissair's flight routes.

The arrangement is part of a partial rescue plan by Switzerland's two biggest banks, UBS and Credit Suisse, who will buy Swissair Group's 70 per cent in the carrier.

The move will leave Crossair as the country's flag carrier, while Swissair is wound up. Analysts say Swissair is likely to be declared bankrupt, after it was put in the hands of the receivers on Monday.

Government criticises banks

The government said it was disappointed that the banks which brokered the rescue plan had not done more to ensure that Swissair was able to keep flying until its key flight routes are transferred to Crossair at the end of the month.

The president, Moritz Leuenberger, and the finance minister, Kaspar Villiger, said the banks' failure to keep Swissair airborne had severely damaged the country's reputation, and could have implications for the economy.

"It's a disaster..." said Leuenberger, "for the economy, for Switzerland, for the successor of Swissair... and only the banks are responsible."

They said the government would have been prepared to pay half of a SFr250 million bridging credit to prop up Swissair until the end of the month. They added that the chairman of UBS, Marcel Ospel, could be not reached to discuss the proposal.

Fuel shortage

Before the fuel shortage, Swissair said on Tuesday that it had stopped all flights destined for Brussels, amid concerns that they might be grounded as well. Swissair owns a 49.5 per cent stake in Sabena.

The airline was on Monday due to pay the Belgian carrier, Sabena, SFr200 million ($123 million) but failed to make the payment because it was placed in receivership.

Under Swiss law, the move allows the company breathing space to reorganise without being carved up by a bankruptcy court.

The Belgian government, which owns the remaining stake in Sabena, said on Tuesday it would take legal action against Swissair to recover the funds.

swissinfo with agencies

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