German aviation giant, Lufthansa, announced late last week that it will pay the Swiss government CHF63.67m for the package of shares in the Swiss airline, which it exchanged for a debtor warrant exactly three years ago.
The sum spent by the government to launch Swiss is thus reduced from CHF600mn to CHF536.33mn.
The cash amount transferred by Lufthansa is classed as extraordinary income, and will therefore be used for the purposes of debt reduction in accordance with the Financial Budget Act.
Three years ago, as part of the takeover of Swiss by Lufthansa, the major shareholders transferred their stock to AirTrust AG (total shares of the large shareholders: 45,339,948; Confederation shareholding: 10,714,286 or 23.6%).
In exchange, they received a debtor warrant instead of money. The value of this debtor warrant was linked to the performance of the Lufthansa share price in relation to an index of competitor share prices. British Airways (40%), Air France/KLM (40%) and Iberia (20%) were selected as reference companies.
A contractual compensation arrangement was agreed with the major shareholders in the event that the Lufthansa share price should perform better than those of the competition by the date of March 20th, 2008. The compensation was to be calculated on the basis of the arithmetical average of the market closing rates of Lufthansa shares compared to those of the reference shares over the last 30 trading days.
In 2001, the Swiss government authorised loans amounting to CHF2,050m so that flight operations could be resumed by the new national airline after the grounding of Swissair.
The Confederation used CHF1,169mn of an authorised loan of CHF1,450mn in payments to maintain Swissair and Crossair flight operations. The government then took a stake in the new national airline, Swiss, in the anticipated region of CHF600mn.
The resulting total expenditure therefore amounts to CHF1,769mn.
After payment of the debtor warrant by Lufthansa, the Confederation's provisional commitment in the resumption of flight operations by Swissair and the launch of its successor Swiss amounted to approximately CHF1,705mn.
The final amount will only be known when bankruptcy proceedings have been completed by the liquidator. However, a further reduction is thought quite probable.
The government became involved in Swiss because direct connections to the world's most important business centres are viewed as immensely important for the political, economic and social development of the country.
The abandonment of Swissair flight operations and the highly probable subsequent collapse of other Swissair Group companies would have had an enormous impact on employment.
A mass layoff of staff would also have come at a very inopportune moment, just as the labour market was at a critical turning point. In its considerations relating to Swissair, the Federal Council also took into account the major importance of Zurich and the surrounding area for the country's economy.
One of the prerequisites for the federal government's involvement was that all the parties interested in the existence of a national airline with intercontinental connections should be involved in finding a solution. It was made clear from the outset that the commitment of the government would be for a limited period only.
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