SIMON WARBURTON / PARIS
Although not a member of the EU, Switzerland could be asked to rethink the aid package
The European Commission (EC) has expressed concern that the SFr4.2 billion ($2.5 billion) bail out of the Swissair Group is likely to seriously distort competition and is warning the Swiss Government that it may have to change the airline's aid package.
The Commission is particularly concerned about a SFr1 billion bridging loan and SFr600 million in new capital that the Swiss Government has pledged for a revived Swissair as part of the rescue plan revealed in late October.
The Commission plans to consider details of the restructuring plan ahead of a meeting with Switzerland on a bilateral agreement on free trade on 15 November. Although Switzerland is not a member of the European Union (EU), its transport policies are governed by a number of bilateral agreements with the EU. These have yet to be ratified by several countries, but in some areas the agreements are in force.
The EC has called on Switzerland to ensure that it acts "in keeping with the spirit of the bilateral agreement on air transport" and that the financial measures are in line with Commission policy on airline aid.
The Swissair Group rescue plan, dubbed Phoenix Plus, will see SFr4.2 billion coming from the country's government, banks and businesses.
Some SFr350 million will be provided by Crossair shareholders UBS and Credit Suisse. Swiss investors include founder of the Amag car importership Walter Haesner providing SFr200 million; health care company Novartis, telecommunication specialist Swisscom and food giant Nestlé all providing SFr100 million; and cement maker Holcim investing SFr50 million, with smaller amounts from Deutsche Bank, Roche, Swiss Re and Zurich Assurance.
In addition to the SFr1 billion bridging loan - designed to finance long-haul operations through to next April - and SFr600 million, both coming from the government, the country's cantons and cities, including Basel and Zurich, are contributing SFr450 million.
EC transport and energy commissioner Loyola de Palacio is concerned that the finance will be used by Swissair to reduce its fares.
Phoenix Plus will see former Swissair subsidiary Crossair adopt the "26/26" solution, absorbing 26 long-haul and 26 short-haul former Swissair aircraft into Crossair's 82-strong fleet. Crossair has already started to absorb some of Swissair's operations, while the long-haul fleet is expected to be integrated by the start of next year's summer schedule. Nestlé chairman Rainer Gut will oversee the creation of the new airline.
The new Swiss grouping will slim down from 72,200 employees to 63,100, with 2,600 redundancies to come from the airline and 6,500 from non-core businesses.
Source: Flight International
