UBS rejects Corti’s Swissair accusations

UBS boss Marcel Ospel (left) and Mario Corti in 2001 after announcing their plans to save parts of Swissair Keystone

UBS has hit back at claims by former Swissair head Mario Corti that it was responsible for the financial collapse of the airline.

In a 19-page document published on Thursday out of court, Switzerland’s largest bank criticises the SAirGroup – Swissair’s parent group – for the delay of “several months” in restructuring the struggling national carrier.

On Tuesday, Corti, who was chief executive of the SAirGroup during its last months of existence in 2001, told a Zurich court that Switzerland’s major banks, in particular UBS, had been to blame for “strangling” the SAirGroup.

Corti said the request for creditor protection and the grounding of the airline had been integral parts of a rescue plan imposed by the banks.

In the document, which was distributed to only a limited number of Swiss media organisations, UBS claims that Corti missed the best possible opportunity to restructure the group.

“If there had been willingness and courage to go through with a proper restructuring in good time, part of Swissair could probably have been saved,” it declared.

Denials

From the moment Corti took over as SAirGroup chief in March 2001, it was difficult to establish dialogue between UBS and the SAirGroup. At the end of March, the bank handed the CEO a document estimating the group’s debts to be SFr3 billion ($2.41 billion) more than the value of the company, which Corti denied.

The bank also rejects having made the group’s situation worse by dissolving its cash pool, which was used to manage SAirGroup’s cashflow. Corti blames the cessation of this system for strangling the group.

In court the former chief executive also criticised Project Phoenix, the rescue plan drawn up over the weekend of September 30, 2001, by the executive board, and involving UBS and Credit Suisse, which he said had been developed behind his back.

The plan foresaw the regional airline Crossair being released from the group, together with restructuring and recapitalisation, so that the activities of the struggling national carrier could be taken over. UBS and Credit Suisse were supposed to buy Swissair’s 70 per cent shareholding in Crossair.

In its document, UBS explained that it only heard of this idea on September 29 at the emergency meeting. The bank then asked for precisions on a second version of the plan, which Corti stopped in favour of the Phoenix Project.

Mario Corti is one of 19 top Swissair executives and board members facing charges that include damaging creditors, mismanagement, making false statements about the business and forging documents.

swissinfo with agencies

In brief

Swissair planes were grounded in October 2001, after the company had been in business for 71 years.

The downturn in the aviation market after the terrorist attacks of September 11, 2001, proved the last straw for the heavily indebted Swissair, which folded the following year.

The airline collapsed after buying stakes in numerous loss-making airlines, including Belgium’s Sabena and Poland’s Lot, in an attempt to form its own airline alliance.

Swissair left behind debts to the tune of SFr17 billion ($13.7 billion) and resulted in 5,000 job losses.

The remains of Swissair and the regional carrier Crossair were brought together in 2002 to form the new national carrier Swiss, which was in turn taken over by Germany’s Lufthansa in 2005.

Key facts

The trial opened on January 16 and should run until March 9 at Bülach district court near Zurich.
There are 19 defendants.
The investigation took five years and produced 280 metres worth of documents.
The prosecution’s indictment runs to 100 pages.
All the defendants who have so far appeared have proclaimed their innocence.
Apart from Bruggisser, Corti and Schmidheiny, all the others refused to answer questions because it could prejudice civil proceedings brought by former employees and shareholders seeking compensation.