SIMON WARBURTON / PARIS
Credit Suisse and UBS come up with a plan to declare carrier bankrupt and form new Crossair-based company
Embattled Swissair's financial difficulties are threatening to affect other carriers as the Zurich-based airline struggles to avoid complete meltdown and exit its former partnerships as quickly as possible.
Swissair was temporarily grounded between 2 and 4 October when finance from a rescue plan backed by Swiss banks UBS and Credit Suisse failed to materialise in time. The rescue plan - based on Swissair being declared bankrupt and a new company formed through its subsidiary Crossair to take on its aircraft and routes - has started to be implemented, with Credit Suisse and UBS completing the purchase of 70% of Crossair for SFr259 million ($160 million) from SAirGroup, providing 49% and 51% of the funds respectively. The finance failed to emerge in time, however, to prevent Swissair's temporary grounding as airports and fuel companies impounded the airline's aircraft or refused to refuel them. The banks intend to eventually sell their shares in the restructured airline.
Swissair returned to limited services on 4 October following a SFr450 million loan from the Swiss Government to keep it flying until at least the end of this month. The immediate effect of the grounding order was to strand up to 4,000 passengers at Zurich's Kloten airport and, although Crossair was able to absorb some of the strain, only 88 flights out of a normal Swissair daily total of 470 were serviced. Swissair was able to resume around one third of its daily flights by 5 October.
Sabena is the primary casualty of Swissair's grounding and its admission that it could not pay its obligations to other carriers in which it has interests.
Swissair now says it has "no money" to pay French carriers Air Lib (formerly AOM-Air Liberte) and Air Littoral to relinquish its ownership of them. Air Lib says it has already received FFr1.05 billion ($147 million) as part of the deal to relinquish its ownership, but is due a further FFr250 million in exchange for Swissair's exit. The carrier now says it is talking to other potential investors with a view to securing more finance.
Montpellier-based Air Littoral has secured some FFr750 million of capital from Swissair, but says it is still waiting for the remaining FFr100 million that was due for payment on 30 September.
TAP Air Portugal, in which Swissair was due to have taken a 34% stake as part of the Portuguese airline's privatisation strategy, has suspended "for the time being" its codeshare operation with Swissair. Any TAP flotation has been delayed.
Polish carrer LOT, in which Swissair holds 37.6%, says these shares are "absolutely safe" and the shareholding cannot be sold without permission from the Polish treasury.
Swissair says that it plans to sell its stakes in South African Airways (20%) and LTU International Airways (49.9%) as soon as possible.
Swissair is now in a "moratorium of debt enforcement", protecting itself and eight subsidiary divisions including SR Technics, Gate Gourmet, Swisscargo, Nuance and Swissport from creditors.
Recently appointed Swissair chief executive André Dosé has resigned to return to his previous post as CEO at Crossair. The former Swissair subsidiary says it will "service the majority of Swissair's European destinations" having secured permission from the Swiss civil aviation authority. In addition Swissair's international route structure is being cut, its fleet reduced in size and several thousand jobs lost. Crossair has accused Swissair of being less than candid about the state of its finances prior to its grounding.
Source: Flight International
