Switzerland bails out airline
Switzerland on Wednesday stepped in to rescue Swissair, its grounded flag carrier, with an emergency injection of SFr450m ($278m) in public funds aimed at getting it back into the air from Thursday.
The company said it aimed to operate 50 per cent of flights on Thursday.
The bail out move followed frantic talks between government officials and the airline’s main banks, UBS and Credit Suisse, and came against the backdrop of unprecedented public outrage at the banks, which are being blamed for the airline’s collapse this week.
Separately, Sabena, the ailing Belgian airline 49.5 per cent owned by Swissair, on Wednesday filed for protection from its creditors.
UBS and Credit Suisse on Monday offered a SFr1.4bn emergency bailout plan for most of Swissair’s flight operations, but money from the package failed to reach Swissair’s coffers on Tuesday, in time for it to stay in the air. Thousands of passengers were stranded at airports.
Kaspar Villiger, finance minister, said after an emergency government meeting that the government money would ensure the survival of Swissair until October 28. However, Swissair is still expected to file for bankruptcy after that.
The banks are not contributing any extra cash to the rescue, but are guaranteeing SFr100m in staff deposits in Swissair’s in-house bank.
Investors bailed out of the Swissair shares when they resumed trading after a two-day suspension. The stock, now backed only by a debt-laden shell company, plunged 97 per cent to SFr1.25. The shares had been at SFr262 as recently as January.
Anger at the role of the banks spilled over yesterday as senior UBS staff were bombarded with emails from members of the public, some containing death threats. UBS’s headquarters in Zurich also had to be evacuated briefly after a bomb threat.
Government officials and the normally restrained media are furious at what they see as the banks’ failure to support Swissair, blaming them for severely damaging Switzerland’s image abroad.
“Never since the creation of the federal state has a democratically elected Swiss government been so humiliated by one banker as on October 2,” said the Tagesanzeiger newspaper, referring to Marcel Ospel, UBS chairman. Mr Ospel said from New York yesterday: “These allegations are far from the truth.”
Belgian parliamentary members called for an inquiry into the management of Sabena since its initial association with Swissair in 1995.
Swissair on Wednesday failed to pay Sabena about E130m ($119.5m) that had been due as part of a recapitalisation plan. The Belgians allege that Swissair has engineered its collapse to avoid making the payment.
Financial Times
