9V-SVA From Singapore, joined Aug 2001, 1861 posts, RR: 8
Reply 2, posted (13 years 6 months 4 weeks 1 hour ago) and read 2153 times:
They got themselves into this mess. They invested in loss-making airlines, and overexpanded.
Not to mention that, I hope my aunt doesn't get retrenched.(Works in SIN SR office).
Swissair to rebuild its house of cards
The 'drastic move' threatens Belgian national carrier Sabena, which was supposed to be recapitalised by Swissair
From Straits Times Interactive
GENEVA - Deep in debt and desperate for cash, the Swissair Group announced on Monday drastic action to revamp itself, including plans to file for bankruptcy protection for many of its operations and to sell control of Crossair, its regional subsidiary, to Switzerland's two largest banks.
In effect, a much-reduced Swissair will continue as a brand, but not as a company: Crossair will absorb about two-thirds of Swissair's flight operations beginning Oct 28, and the rest will be shut down.
The move threatens the survival of Sabena, Belgium's main airline. Swissair Group owns just under half of Sabena and was to have paid it US$120 million (S$213 million) in cash this week to help keep it operating. That payment will not be made, the Swissair Group said.
Swissair has been in dire financial trouble for months because of losses from a failed attempt to expand across Europe with stakes in smaller carriers.
A sharp decline in passenger traffic, particularly across the Atlantic after the Sept 11 attacks in the United States, made matters much worse, and last Friday, chief executive Mario Corti acknowledged that Swissair was teetering on the brink of insolvency, with US$10.5 billion in debts and almost no cash left.
Over a frantic weekend of negotiations, the banks came up with the partial rescue plan that kept Switzerland's flag carrier, and one of the country's most readily identifiable symbols, alive, albeit on a greatly reduced scale.
Not so with Sabena.
'The situation is extremely deplorable,' Mr Corti said of Swissair's inability to complete the recapitalisation plan worked out in July with the Belgian government, the other owner of Sabena. 'I regret we are unable to pay.'
In Brussels, Sabena chief executive Christoph Mueller said the airline would keep flying, despite Swissair's move and a pilots' strike, and that its board would hold an emergency meeting in the next two days.
The two Swiss banks, UBS and Credit Suisse, have agreed to purchase 70.4 per cent of outstanding shares of Crossair, Swissair's 70 per cent owned regional carrier, for US$162.5 million, and provide a credit line of up to US$156 million to keep its aviation-related units viable until buyers can be found.
UBS is contributing 51 per cent of the capital, and Credit Suisse the remaining 49 per cent.
Crossair, whose operating costs are significantly lower than Swissair's, is expected to keep operating Swissair flights to the most profitable destinations, and to continue Swissair's recent strategy of concentrating on high-fare European passenger traffic rather than the mass market.--New York Times