Fears grow for future of national airline
The situation at Swissair continues to go from bad to worse. Fears grew this week about the viability of the SFr1.4 billion rescue plan that is supposed to see the regional carrier Crossair take over many of Swissair's routes at the end of the month.
At the beginning of the week, the group's chairman, Mario Corti, told shocked staff at a meeting in Zurich that 9,000 jobs would have to go if the airline was to continue operations until Crossair was ready to take over.
But by Thursday, severe doubts had emerged about whether the rescue plan could go ahead in its current form. It appears Crossair is having cold feet and says it is doubtful whether it can attract enough capital to take over most of Swissair's fleet.
It had been assumed that Crossair would take on more than 50 aircraft but as the week wore on some observers were warning that the final number could be as few as ten.
"I hope this fusion of the two cultures will succeed," industry expert Sepp Moser told swissinfo, "but I am growing more sceptical by the day,"
"The bleeding of Swissair is much worse than acknowledged. We are about a quarter of the way through the time since the government granted Swissair emergency funding until the end of the month when they are supposed to keep flying but they have already spent half the money."
Trade unionists too said they expected the rescue plan to be far less ambitious than previously thought. They are getting ready for thousands more job losses on top of those announced on Monday. Some fear the final figure could be as high as 52,000.
"The plan is based on Crossair's willingness to take over 52 Swissair aircraft but that's going to be extremely difficult," explains workers' representative, Jim Sailer, "So we are afraid there will be fewer planes and more redundancies."
Discussions on Sunday
A taskforce consisting of representatives of the Swiss government, banks and Crossair is to meet on Sunday to discuss new measures that might be taken to ensure that Switzerland keeps a national carrier.
The government will want to avoid the calamity of Swissair once again having to ground its fleet.
In other news this week, Credit Suisse First Boston announced big job cuts as its parent Credit Suisse Group announced a hefty third quarter loss of around SFr300 million.
CSFB said 2,000 positions were to be axed to make savings of SFr1 billion by the end of next year.
Credit Suisse put its losses down to an operating loss at CSFB, lower insurance profits, a SFr400 million writedown on its stake in Swiss Life and some SFr200 million in provisions due to its credit exposure to the Swissair Group.
Cablecom, the leading Swiss cable television operator, also announced belt-tightening measures.
It's to shed up to 300 jobs as part of a restructuring plan that will see the company offering new services such as digital high-speed Internet connections and telecommunication services in competition with the market leader, Swisscom.
Cablecom is fully owned by Britain's NTL.
Zurich Financial Services encountered more problems this week as it was forced to scrap its earnings forecast for the current year because of claims incurred following the attacks on New York and Washington.
The company raised its estimate for losses from the attacks to between $700 and $900 million - its previous estimate had been $400 million.
Zurich expects the payout to be the biggest in its history. It's the third time this year that the company has had to issue a profit warning.
There was some good news on the business front this week.
Novartis boosted sales 11 per cent over the first nine months of the year to SFr23.7 billion.
The healthcare group said it was on track to post record results for the full year as drug sales continue to generate double-digit growth.
And sales at Givaudan were up 4 per cent to SFr1.86 billion. The sales figures were in line with analysts' forecasts and the world's second biggest flavours and fragrances group says it expects a good result for the year as a whole.
By Michael Hollingdale
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