Swiss Unveil Plan to Save Swissair
Updated: Mon, Oct 22 3:29 PM EDT
By ONNA CORAY, Associated Press Writer
BERN, Switzerland (AP) - Swiss government and industry agreed Monday to spend $2.65 billion to create a new national airline on the ruins of Swissair, wrecked by the air travel chaos following the U.S. terror attacks.
"It wasn't possible to save Swissair," said Finance Minister Kaspar Villiger.
"We are happy and relieved that this effort has succeeded," said President Moritz Leuenberger in disclosing the combination of government and industry financing totaling
"But jobs will be lost," said Leuenberger, who is also transport minister in Switzerland's seven-member coalition cabinet. "We don't have cause for a great euphoria."
At least 9,000 jobs in the Swissair group are expected to go under the agreed plan. Other proposed options could have resulted in up to 27,000 job losses.
Swissair, which has a global work force of around 70,000, announced 9,000 job cuts earlier this month.
Leuenberger told reporters later that "there is no guarantee" that the plan would succeed. "If it doesn't work, then it's the end," he added.
Villiger said the salvage operation, which will put the profitable Crossair subsidiary in charge of the Swissair group, would be financed one-third by national and local government and two-thirds by Swiss companies.
The package involves some of the biggest companies in Switzerland, including food and beverage giant Nestle SA as well as drug firms Novartis AG and Roche Group.
No name has yet been devised for the new airline.
The plan is to keep 26 jetliners capable of flying to the United States, Asia and Africa and 26 shorter-haul airliners for European flights, as well as 82 smaller planes from the Crossair fleet, the government said.
Leuenberger said the federal government was putting up $625 million in a bridging loan to assure flights on a reduced schedule until next March while the restructuring of the airline takes place.
The government also will invest $375 million in the new company.
The major Swiss banks and industry have agreed in "countless meetings" in recent days to pay for the bulk of the rescue package, and the government will reduce its involvement as soon as possible, said Leuenberger.
"The situation of Swissair was worse than we thought for a long time and it deteriorated dramatically after the events of Sept. 11," said Villiger.
For most of the year the company was trying to recover from a failed expansion strategy that led to a loss of $2.9 billion Swiss francs ($1.8 billion) in 2000.
The U.S. attacks will cost the group 3.1 billion-3.8 billion francs ($1.9 billion-$2.3 billion) more by the end of this year, the airline has said.
Swissair, which filed for protection from creditors earlier this month, was forced to ground its entire fleet for two days as it had no cash to pay necessary fuel and landing bills.
This compelled the government to provide $280 million to keep it in the air until next Sunday when Crossair takes over.
The government, which faced strong public support for the airline that had been cherished by many Swiss as a national symbol of efficiency, found the situation "very difficult," said Villiger.
"There is no ideal way out of it," he said.
The big Swiss banks, Credit Suisse and UBS, which in early October came up with $940 million for a rescue package and to buy Swissair's 70 percent stake in Crossair, had said they cannot afford any more cash injections.
But officials said Monday that they will kick in another $220 million.