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Swissair Dives On 'bankruptcy' Talk

Wed Jun 13, 2001 1:41 am

Swissair dives on bankruptcy talk, can this really be happening? Can swissair go bankruptcy or is this pure media specualtion? Personally it would be a great shame if it comes to this..though i would imagine there would be some big vultures swooping around to take the pickings.....

from www.bbc.co.uk

Swissair dives on bankruptcy talk

Its problematic French operations push shares into decline

Shares in the beleaguered Swiss airline Swissair lost as much as 13.5% during trading on Monday.
The nosedive came on the back of rumours that the company could be heading for bankruptcy.

By 1628 GMT, the shares had recovered a little of their composure, retreating from 116 Swiss francs ($64.7; £47) to 120.50.

On Friday, the stock closed at 134.25.

A spokesman for the airline denied the bankruptcy rumours.

"We do not comment on market movements. But it is true that many rumours and unfounded speculation are circulating on the markets," he said.

Problems in France

The rumours were sparked by a report in the Financial Times newspaper, which said that the airline is "facing a mounting bill to offload its loss-making French operations".

Former chief Philippe Bruggisser was ousted for his disastrous strategy

The article goes onto say that some bankers fear that the "bill" could push the airline into bankruptcy.

Swissair is looking to pull out of its controlling stakes in the French group AOM / Air Liberte and sister airline Air Littoral.

Earlier this month a London-based investment group, AITI, made a surprise offer of 3bn francs ($388m; £274m) for AOM / Air Liberte.

The French group responded by saying that it was "evaluating real and serious offers which have been made by other firms".

AOM/Air Liberte is 49.5% owned by the Swissair Group.

In trouble

The Swiss group has itself been in deep financial trouble and is in the process of replacing all but one of its board members.

The shares have slumped almost 50% since Philippe Bruggisser was ousted as chief executive in January - after a strategy of buying stakes in a number of smaller, financially weaker airline groups proved disastrous.

Mario Corti, the former Nestle finance chief, was brought in to rescue the group.

On Friday the investment bank ABN Amro warned investors in the company not to expect a swift turnaround.

Damien Horth, ABN's airline analyst, forecast losses from Swissair's associates of 745m Swiss francs.

It is amazing what can be accomplised when nobody takes the credit