There are growing doubts about the future of the Swissair Group as investor confidence continues to wane. The group's share price has fallen by more than 20 per cent over the past week.This content was published on June 15, 2001 - 11:11
Some of the group's current headaches come from its commitments to troubled airlines in France and Belgium.
In particular, French airlines AOM and Air Liberté are struggling to survive, with the chairman, Marc Rochet, warning on Thursday that the group could face bankruptcy proceedings "in a very short time".
Swissair, which has a 49.5 per cent stake in the airlines, has agreed to fund them until the end of this month and put up about two thirds of a restructuring package of SFr700 million ($395.93 million) to help it leave the group.
However, the Marine-Wendel group, which is technically the controlling shareholder with a 50.5 per cent stake, is refusing to pay its share of the restructuring plan.
Swissair has made it clear that is it prepared to inject its share of the necessary cash only if Marine-Wendel also participates.
Rochet said in a statement that only an 11th-hour twist of fate could save AOM and Air Liberté.
He explained to the CGT union that SFr500-750 million would be enough to salvage the group by financing a management-proposed restructuring plan under which 1,300 jobs would be cut and by keeping flights running until October at least.
If the situation remains unchanged, Rochet would prefer to allow the group to file for bankruptcy as soon as possible in order to save money, union representatives said.
The other scenario would be allow the group to run out of cash altogether, which would then lead to it being declared bankrupt by a court.
If either case arises, French transport minister Jean-Claude Gayssot, who has repeatedly asked the two shareholders to save the group, has warned he would ask judges to investigate the group's management.
Both AOM and Air Liberté have been hampered by competition from state-controlled Air France and by high-speed TGV trains on domestic routes.
Analysts on Thursday said that the Swissair share price was also being affected by a profit warning from Germany's Lufthansa and rumours of an unpublished study from Deutsche Bank that confirmed a worst case scenario of a Swissair share price of SFr41.
swissinfo with agencies
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