Brussels protests over proposed aid to Swissair
Brussels protested on Tuesday about the proposed recapitalisation of Swissair but admitted it was unable to stop the operation from going through.
The move came as the regional airline Crossair started the process of transforming itself into the new flag carrier after the collapse of Swissair. Late on Monday, Swiss public authorities and companies unveiled a SFr4.24bn ($2.55bn) salvage plan, using Crossair to restore a national airline with a Zurich airport hub as well as save tens of thousands of jobs.
However, in a telephone conversation with Moritz Leuenberger, the Swiss president, Loyola de Palacio, European transport commissioner, said the aid agreed for Swissair and its regional subsidiary Crossair could “cause important distortions of competition”.
The European Union and Switzerland have signed a transport agreement under which all such transactions would have to be notified, and if one party believed they were problematic, they would be referred to a joint committee.
However, the agreement is not yet in force, since four EU countries have yet to ratify the package of measures to which it belongs. Ms de Palacio – who is resisting pressure from EU countries such as Ireland and Belgium for bail-out schemes for their own airlines – called for the transport agreement to be implemented straight away.
“Under the Vienna convention, a country which has signed an agreement should not act against that agreement,” said a Commission spokesman. “But while the agreement is not in force, we are only really talking about diplomatic pressure.”
Analysts said Crossair would need to fight very hard to earn its place in the ultra-competitive international market.
“The new company has a competitive cost base,” said Thomas della Casa, analyst at Deutsche Bank. “The big question is what the market is going to do, when will there be an economic upswing, because this company needs some tail wind.”
With more than a dozen top Swiss multinationals chipping in millions of francs to the government-led Swissair rescue – without obvious benefits for their own shareholders – some Swiss media hailed a “triumph of corporatism” as the Alpine republic’s economic and political elite rushed to save the airline as well as the nation’s image. Other papers said it was a mistake to spend tax money on rescuing a private company.
Financial Times
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