From FT.com.....things definitely are not looking good for Swissair as we used to know it.
Swissair to sell 70% stake in Crossair to banks
By FT.com staff and William Hall in Zurich
Published: October 1 2001 10:13 | Last Updated: October 1 2001 19:27
Swissair, the heavily indebted national airline, announced it would sell a 70 per cent stake in its sister company, Crossair to UBS and Credit Suisse for SFr260m ($161m) and would seek bankruptcy protection for some other companies within the group.
The airline also said that most of its remaining flight operations would be taken over by Crossair, resulting in 24 aircraft being cut across their combined fleets and a total of 2,560 job losses.
UBS and Credit Suisse have agreed to provide SFr250 credit, allowing Swissair to continue financing its airline business units.
Swissair said it was not in a position to make current or future payments to Belgian airline, Sabena, due to its receivership status. The Belgian government said it would resume its legal action against Swissair in response to the news.
The Swiss airline will also renege on agreements covering future financing of German Charter airline LTU and French operation, AOM-Air Liberte.
Crossair, Europe's largest regional airline, had been expected to survive and form the nucleus of a much shrunken Swiss airline which would be based on Crossair's low-cost structure and focus on providing a high quality premium service to European business travellers.
On Monday morning, the shares of Swissair and Crossair were suspended pending an official rescue plan. Swissair, whose share price has fallen 80 per cent this year, owns 70.5 per cent of Crossair, which is currently capitalised at SFr375m. Crossair's shares jumped nearly 50 per cent last week on speculation that Swissair might buy it.
Swissair called the press conference in Zurich ahead of a special session of the Swiss government scheduled in Bern an hour after its press conference.
The group's mounting financial crisis was triggered by last month's US terrorist attacks. It has led to a sharp downturn in Swissair's lucrative North American traffic and disrupted plans to raise desperately needed cash by liquidating a large part of the aircraft leasing portfolio.