Crossair casts doubt over salvage plan for Swissair

Crossair might not take as many Swissair planes as originally planned Keystone

Analysts say an ambitious salvage plan for Swissair, under which most of its aircraft would be taken over by its regional subsidiary Crossair, is likely to be scaled down, raising fears that more job losses are in store on top of 9,000 already announced.

A taskforce consisting of representatives from the Swiss government, banks and Crossair is to meet on Sunday, when analysts expect changes to an October 3 deal under which Crossair was set to obtain two-thirds of Swissair operations.

On Thursday, cracks appeared to be forming in the SFr1.4 billion ($857.8 million) bank rescue deal as Crossair, a regional airline, raised doubts that it could secure sufficient capital or operate long-haul flights. The plan envisaged that Crossair would take over 52 of Swissair’s routes and planes from October 28.

“The number 52 – which included 26 short haul planes and 26 long haul planes – was never set in stone,” a Crossair spokesman said. “The number of planes should be the result of the calculations and not the starting point,” he added.

The statement is in sharp contrast with earlier assurances from Crossair chief executive, André Dosé, that he would formulate a business plan based on the assumption that the airline would be taking over 52 planes from the Swissair operations.

Trade Unions uncertain

Trade unions representing Swissair Group employees have said they expect the regional airline Crossair to acquire only up to 10 planes from the former flag carrier instead of the 52 originally planned.

At a news conference about the plans to form a new airline – based on Crossair but with parts of Swissair – unions said that the current situation led them to believe that the number of planes taken on by Crossair may range from none to 10.

If this proves to be the case, the trade unions fear that as many as 17,000 jobs may be lost with many more hanging in the balance. According to some estimates as many as 52,000 jobs are in danger.

Final decision still awaited

The Crossair spokesman said the airline hoped to present its plans on Friday and expected a decision on whether tickets sold by Swissair before it obtained creditor protection – estimated to be worth up to SFr800 million – would be refunded or honoured.

Crossair could start with a smaller number of planes and raise it over the coming months. “That would be preferable,” the spokesman said.

An expanded Crossair was the key plank of the rescue deal aimed at safeguarding international air connections for Switzerland and easing travel chaos in the country.

On October 3, the banks UBS and Credit Suisse bought a 70.3 per cent stake in Crossair from Swissair Group, which has been under protection from creditors since last Friday. Under the plan, Crossair is to obtain most Swissair flights and the brand name of the 70-year old flag carrier.

Need for investors

The size of the new Crossair will depend on the willingness of new investors. UBS and Credit Suisse have invited public authorities, leasing firms and institutional investors to join while employees could also take a stake.

A spokeswoman for UBS said on Thursday it was too early to say whether any firm commitments have been received for investments in the new airline. “The goal is a broad shareholder basis and a broad financing of the new airline. It is too early to speak out about single interested investors,” she said.

UBS warned on Wednesday that the new Crossair would need a lot more capital than the funds pledged by it and Credit Suisse.

A report on Thursday in the Bern newspaper, Metropol, said that United States-based investment firm, Texas-Pacific, was interested in making an offer of SFr7 billion for the Swissair Group.

When contacted by swissinfo, the Swissair Group refused to comment on the reports.

Meanwhile, the Group said on Thursday that it had been granted protection from creditors in the United States and Canada, allowing it to obtain fuel for its North Atlantic flights.

Foreign firm takeover

Airline analyst Sepp Moser said that a total takeover by a foreign firm wouldn’t be possible as under Swiss law the airline has to remain 51 per cent under Swiss control.

Texas-Pacific, which already controls the Swiss fashion group Bally, also controls a majority stake in US airline Continental. The company specialises in turning around loss making ventures.

A number of private equity firms are reported to be looking into Swissair as a possible investment.

Closer to home, Hotelplan, the travel arm of the Migros supermarket chain, announced that it would be re-launching its charter fleet of two aircraft under the name “Belair”.

The Swissair Group was brought to its knees by the combined effects of heavy debts due to an over-ambitious and failed foreign expansion drive and a drop in air travel after the September 11 terrorist attacks on the US.

Following the grounding of its fleet last Tuesday and Wednesday, Swissair has been forced to fly a limited schedule until October 28.

swissinfo with agencies