Shares in the Swissair Group collapsed on Wednesday, falling 84 per cent to close at SFr6.50. The stock was rendered effectively worthless and following Wednesday's close, the Swiss Stock Exchange pulled the share from the bluechip Swiss Market Index.
Trading of Swissair Group shares had been suspended for two days and after resuming on Wednesday morning, the share price fell 97 per cent to SFr1.40 within minutes of the session's opening. The shares rallied slightly during the day to reach SFr7.99, but never came close to their previous close of SFr41.05.
The collapse came one day after Swissair grounded its fleet, leaving thousands of passengers stranded. However, a SFR450 million emergency cash injection, by the Swiss government, should allow flights to resume shortly and is expected to keep planes in the air until the end of the month, when the regional carrier, Crossair, will take over the bulk of Swissair's profitable routes.
Shares in Crossair rose 30 per cent when they started trading again on Wednesday and and rallied to close the day at SFr96.00.
Swissair jets were grounded on Tuesday after the company admitted it did not have the cash to pay for fuel. It ran out of money after the country's main banks - UBS and Credit Suisse - refused to extend credit to the company.
On Monday, Credit Suisse and UBS put together a 1.4 billion franc emergency bailout plan to save most of Swissair's flight operations and combine them with Crossair to create a new and leaner national carrier. As part of the deal, the banks took over Swissair Group's 70 per cent stake in Crossair and the rest of the company was left to file for bankruptcy protection.
Cash came too late
The banks finally transferred nearly SFr260 million, as payment for the stake in Crossair, to Swissair's accounts on Tuesday evening.
But Corti said the money was transferred too late in the day and that it was "not that simple to put an entire fleet back in the air."
For his part, the chairman of UBS, Marcel Ospel, told employees in an internal communication that the bank had been unfairly blamed for the debacle.
He said the grounding of Swissair's entire fleet was not the bank's fault, and that it had done its best to rescue Swissair from collapse.
The debacle has forced Swissair to renege on a SFr200 million payment it was due to make to the ailing Belgian airline, Sabena, on Monday.
Swissair, which owns a 49.5 per cent stake in Sabena, said the cash injection would not be paid.
Dealers said the affair had done some damage to the image of the banks and their shares also lost some ground on Wednesday.
The country's biggest travel group, Kuoni, which does a lot of business with Swissair also suffered and saw its share price fall more than 10 per cent in early trading.
swissinfo with agencies
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