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Switzerland Rallies Round Stricken Airline

by Ulrika Lomas, Tax-News.com, Brussels

23 October 2001


"It wasn't possible to save Swissair," said Finance Minister Kaspar Villiger, as it was announced on Monday that the Swiss government, 15 of the country's biggest companies and a number of private individuals were subscribing a total of SFr2.65bn to build a new inter-continental airline on the foundations of Swissair's regional subsidiary Crossair. In addition, the government will provide a further SFr1.1bn to keep Swissair aloft until the new airline can begin operations in the spring.

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.

Companies involved in the new venture include Swisscom, Nestle, Hoffmann-La Roche, Novartis, Swiss Life, Zurich Insurance, Kudelski, Ciba Specialty Chemicals and Swiss Re, and they are joined by Walter Haefner, one of Switzerland's wealthiest individuals, as well as Thomas Schmidheiny, a former Swissair director, Rainer Gut, Chairman of Nestle and Marcel Ospel, Chairman of UBS.

The big Swiss banks, Credit Suisse and UBS, which in early October came up with SFr450m to buy Swissair's Crossair stake, had said they could not afford any more cash injections, but agreed to kick in another SFr300m.

"The fact that this partnership has produced results illustrates the broad-based support for maintaining a national airline in the interests of the Swiss economy and the Swiss people," said Mr Ospel.

Announcing the package, President Moritz Leuenberger said: "We are happy and relieved that this effort has succeeded. But jobs will be lost; we don't have cause for a great euphoria."

In fact, the reborn Swissair will owe its salvation not to any great outpouring of national sentiment in its favour, but more to the recognition that without a major carrier in residence, Zurich airport's ambitions to be a global hub are fatally undermined, with enormous consequences for the local economy. Thus, while the Swiss Federal government will take a stake of 20% in Crossair, several other Swiss cantons, led by Zurich, will take a 18% stake in the new airline.

Andre Dose, Crossair's chief executive, will head the new airline but it is unclear whether Moritz Suter, the founder and chairman of Crossair, will continue in his present role. No name has yet been devised for the new airline.

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.

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