Debt-ridden Swissair to split with Crossair taking on flights
Swissair Group, crippled by at least 15 billion Swiss francs (€10 billion) in debts, said yesterday it was splitting up, and its European regional airline subsidiary Crossair would assume flight operations.
Swiss banks UBS and Credit Suisse bought Swissair Group's 70.3 per cent stake in Crossair, effectively leaving most of the group's remaining assets to be placed under bankruptcy protection yesterday, outgoing chairman and chief executive Mr Mario Corti said.
"There will be a dismantling of (airline) Swissair's capacity leading to 2,560 job losses," said Mr Corti, who was appointed in March in an attempt to reverse the company's financial troubles.
"SAirGroup has asked for bankruptcy protection for the companies SAir Group, SAirlines, and Flightlease with the relevant judicial authorities," Swissair Group said yesterday in a statement.
Mr Corti said about 3.5 to 3.8 billion Swiss francs was wiped off the group's already ailing balance sheet as the aviation industry as a whole slumped after the September 11th terror attacks in the US.
Mr Corti estimated that about two-thirds of Swissair's flights would be taken over by Crossair.
UBS said in a statement that Crossair would also receive about 500 million Swiss francs in additional working capital from UBS and Credit Suisse under the banks' recovery plan.
The banks were also prepared to underwrite a further capital increase provided Crossair was granted operating licences on the Swissair routes it is effectively taking over.
UBS said the Swiss federal and regional authorities would also be invited to take a 30 per cent stake in the new Crossair's share capital.
The Swiss federal government currently owns 3 per cent of the group.
However, last night, following a cabinet meeting, the Swiss federal government said it would not take a stake in Crossair.
The two banks also granted a lifeline standby facility of 250 million Swiss francs to SAir group, which is allowed to continue operations while it is under bankruptcy protection.
Swissair said 1,750 of the job cuts would occur in Switzerland, as the airline reduced its fleet and cut down flights under Crossair's new direction.
But the group's remaining assets, including its aircraft leasing business Flightlease, would be placed under provisional bankruptcy protection today.
Experts said earlier that bankruptcy protection would allow the group to renegotiate its debts and commitments.