Fresh crisis looms at ailing Swissair

12 April 2012

SWISSAIR could be grounded again this week unless parties to the airline's rescue agree to bail out two of its subsidiaries. The Swiss government has warned it will not hand over a rescue package worth 1bn Swiss francs (£440m) - threatening a further 30,000 jobs - unless the units are saved. It wants a deal in place by Wednesday.

The Swissair fleet was grounded for two days in early October after the plunge in traffic following the US attacks crippled the debt-burdened carrier. It axed 9,000 of its 71,000-strong workforce.

Under the salvage plan regional carrier Crossair is set to take over some 70% of Swissair's flights, with private companies and some public authorities investing 2.74bn Swiss francs in Crossair. The government bail-out would keep Swissair flights going during the handover.

But Peter Siegenthaler, the country's treasurer and head of a taskforce overseeing the rescue, said the state would not pay out anything if a plan to solve a cash crisis at two key Swissair subsidiaries was not in place. Maintenance firm SR Technics needed 100m Swiss francs by mid-January while information technology unit Atraxis would have a shortfall of 35-50m Swiss francs by mid-November. These units play an essential role in keeping the Zurich airport running and maintaining planes.

He said the cantons of Zurich, Basel and Geneva and main banks UBS and Credit Suisse Group had until tomorrow evening to solve the cash problem.

'Otherwise one of the basic premises of the rescue package, namely that the airline-related activities would function, is not fulfilled,' he said. He added he was confident a solution would be found and that the banks and cantons would see 'the seriousness of the issue but also the opportunities'.

A spokesman for UBS said the bank was open to explore financing solutions provided the units could be made creditworthy either by restructuring or by getting a guarantee from the cantons.

The Swissair taskforce met on Monday for emergency talks after the president of SR Technics warned over the weekend about the seriousness of the cash shortage at his firm.

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