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Swissair Thrown State Lifeline, Flights to Resume Thursday
GENEVA, Oct 3 (News Agencies) - Swissair was thrown a lifeline of up to 450 million Swiss francs ($278.5 million, 303.2 million euros) by the Swiss government on Wednesday to get the crippled airline back into the air.
Stressing the country's image was at stake, Swiss Finance Minister Kaspar Villiger told a news conference in Bern the money was designed to ensure Swissair flights could resume until October 28th.
The 70-year-old aviation giant suffered a humiliating blow on Tuesday when it was forced to ground its fleet after being unable to raise enough cash to pay suppliers of jet fuel.
However, it was due to take to the skies again on Thursday although only half of the scheduled flights were initially expected to go ahead.
Plunged into crisis, Swiss cabinet ministers, Swissair chief Mario Corti and bankers held crunch talks on Wednesday while nearly 40,000 Swissair passengers were left stranded worldwide.
The SWX Swiss stock exchange announced it had decided to de-list Swissair shares from all the Swissindex indices to take effect from the close of trading on Friday.
Demonstrations were mounted by Swissair staff, worried about their future and angry about the way the banks had treated the once mighty Swissair, formerly a hallowed national treasure and symbol of Swiss efficiency.
Under a 1.35-billion Swiss franc rescue package for Swissair Group put together by Switzerland's two premier banks, UBS and Credit Suisse, on Monday, Swissair flights were meant to continue until October 28th when two-thirds of the company's flight operations were due to be transferred to European regional airline Crossair.
The banks took over Swissair's 70% of Crossair under the package, allowing the regional airline to carry on as the dominant partner.
But an initial 260 million Swiss franc installment scheduled for payment early Tuesday was only transferred to Swissair later in the day, meaning the airline could not pay its suppliers.
Initially reluctant to intervene in the crisis, the government, which has a three-percent holding in Swissair, was moved to act by the humiliating grounding of the national flag carrier.
As well as the government's financial credit, the banks committed themselves late Wednesday to increase their participation in the Swissair staff savings fund by 100 million Swiss francs, a government statement said.
In addition to the 260 million Swiss francs already paid, the banks also agreed a 250-million standby facility.
"UBS hopes that the regrettable situation of the past two days will quickly improve as a result of this solution," the bank said in press release late on Wednesday.
Finance Minister Kaspar Villiger told reporters the government's decision had also been motivated by a desire to improve the chances that a successful airline would emerge from Swissair Group, most of which was placed in bankruptcy protection on Tuesday.
"UBS + CS (Credit Suisse) = Mafia", said one of the banners carried by demonstrating Swissair ground staff, cabin crew and pilots outside Swissair headquarters on Wednesday.
Trade unionists fear job losses to be in the region of at least 4,000, rising according to some estimates to 10,000 among the group's 72,000 total.
In Brussels, meanwhile, the Belgian state airline Sabena, in which Swissair as a 49.5% shareholding and was to have been supported with cash this week, filed for bankruptcy but said it would press ahead with a restructuring plan which narrowly won support from staff.
South African Airways, in which Swissair holds a 20% stake, is offering a 50% discount on economy class fares to Swissair ticket holders, SAA spokesman Victor Nosi said.
Swissair Group's already heavily depressed share price plunged by 96% to 1.27 Swiss francs at the opening of trading on the Zurich stock exchange on Wednesday, but pared losses to 84% at 6.5 Swiss francs at closing.
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