Shares in the Swissair Group moved higher as dealers awaited news from a Paris commercial court which is deciding on the future of Swissair's 49.5 per cent owned AOM/Air Liberté unit.
Shares rose strongly on speculation that the court might allow Swissair to sell its stake. At the closing of the Swiss stock exchange, Swissair shares were up by 10.83 per cent at SFr133.
Shares in Swissair started to recover last week when executive chairman Mario Corti announced plans for cost cutting measures to improve on the group's disastrous performance of last year.
On Wednesday Swissair stock received yet another shot in the arm as the Belgian government came to an agreement with Swissair over the future of their partnership in Sabena, effectively limiting Swissair's liabilities to the loss-making Belgian airline.
In this latest development the commercial court in Paris will consider on Thursday proposals to save AOM/Air Liberté or close it down.
AOM/Air Liberté's parents are the Swissair Group, which owns 49.5 per cent, and France's Marine-Wendel, which controls the remaining 50.5 per cent.
Of the 15 projects proposed to save the airline two have been considered potentially feasible by the company's work committee and are now being examined by the court.
Trades union sources said that an additional proposal had now been put forward.
The French real estate company, Fidei, a division of US investment company, Leucadia, has made a SFr23 million ($13.2 million) bid to buy the airline.
Meanwhile, the recommended offer from the work's committee is from Holco, a group led by former Air France pilot Jean-Charles Corbet, with financial backing from Canada's CIBC World Markets. Its proposal to buy AOM/Air Liberté would be worth SFr91.8 million ($52.8 million).
The late third offer, worth SFr69 million ($39.6 million), could lead the court to postpone a decision until next week.
Real estate entrepreneur Alain Atlani, who co-founded the airline in 1987, has put forward a bid backed by the Sultanate of Brunei and a British bank, union sources said.
"None of the proposals are viable in my opinion," said current AOM/Air Liberté chief executive, Marc Rochet.
All the proposals on the table assume that Swissair Group will contribute SFr459 million in aid. Swissair had previously offered to take over two thirds of the costs of a SFr688 million restructuring package provided Marine-Wendel coughed up for the remaining third. However, Marine-Wendel has said it will not put any more money into the loss making French airline group.
The Holco package aims to preserve 3,500 jobs out of a total of 4,978. The Fidei plan would allow 2,850 jobs to be saved.
"The works committee has backed the plan that is more socially minded than the other... but neither Holco or Fidei have the financial requirements as of today," said committee member, Gilles Nicoli.
France's transport minister Jean-Claude Gayssot called on the airline's shareholders to "assume their responsibilities and facilitate the reconstruction of a viable and efficient entity".
AOM lost €460 million (SFr690 million) last year and is now losing up to €2 million (SFr3 million) a day.
swissinfo with agencies