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Swissair shares take further hammering on Zurich bourse

Swissair's share price has failed to take off despite the promise of savings to come Keystone Archive

Shares in the troubled aviation conglomerate, Swissair Group, have plunged again. The share price dropped 11.7 per cent on Monday, to SFr118.50 ($65.65), following Friday's loss of 5.3 per cent.

This content was published on June 11, 2001 - 17:35

Analysts say investors are worried about how the company's chairman, Mario Corti, plans to return the group to profitability after losses last year of SFr2.9 billion.

Corti has promised a rethink of the disastrous strategy that saw Swissair buy stakes in small European airlines such as French-based AOM/Air Liberté and the Belgian carrier, Sabena.

However, reports in the German-language "SonntagsZeitung" this weekend said the withdrawal from its French operations could be much more expensive than originally feared. If no bidders emerge, it's feared that AOM/Air Liberté could go bankrupt costing Swissair SFr250 million.

Other analysts believe it will be difficult for Swissair to push its French operations into bankruptcy because of French labour laws and the power of the sector's trade unions. In that event, AOM/Air Liberté will cause further cash drains for Swissair.

Either way, plans to reduce costs by SFr500 million this year look overly optimistic to many analysts. Last week, Swissair failed to rule out job cuts as part of its overall strategy.

And at the weekend, the head of the group's regional airline, Crossair, Moritz Suter, suggested that the company should pull out of all foreign investments, breaking up its Qualiflyer alliance.

The company's share price wasn't helped either by Friday's warning from ABN Amro that investors should not hope for a rapid turnaround. The bank repeated its "sell" recommendation and downgraded its six-month share price target from SFr90 to just SFr70.

swissinfo with agencies

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