Germany’s Lufthansa is expected shortly to announce the takeover of Switzerland’s troubled national airline, Swiss.This content was published on March 22, 2005 - 09:33
The Swiss government - the biggest shareholder of Swiss - decided on Lufthansa's proposal on Tuesday, but said it would not make its decision public until other shareholders had discussed the offer.
The cabinet discussed the deal after a key parliamentary committee on Monday said it was in the goverment's power to approve such an agreement.
The committee rejected a study by a legal expert who had called for a vote by the two houses of parliament on whether to endorse the takeover plan.
The boards of Lufthansa and Swiss are each set to meet on Tuesday to finalise the deal, which will involve the German airline taking control in stages.
The plan is expected to include pledges by Lufthansa to run Swiss as an independent premium airline and maintain Switzerland’s main airport of Zurich as an intercontinental hub.
Calls have also been made for an easing of flight restrictions, imposed unilaterally by Germany in 2003, on Zurich airport in a long-standing dispute over noise pollution.
Shares in Swiss were suspended on Monday as negotiators put the finishing touches to Europe’s biggest airline-merger deal since Air France took over the Dutch carrier, KLM, last year.
It is believed that Lufthansa’s first move will be an offer to buy out Swiss’s free-float shares - representing about 14 per cent of the company - for a price based on recent trading, or about SFr66 million ($56 million).
It is then likely to set up a holding company with major shareholders to allow Lufthansa to gain up to 49 per cent control.
Pending negotiations over Swiss’s landing rights, Lufthansa reportedly aims to take control of the remaining 51 per cent over the next 12 to 18 months.
Major shareholders, including the Swiss government and the country’s two largest banks, UBS and Credit Suisse, are expected to receive SFr400–500 million, reports said.
Swiss has been battling to cut costs and stem losses since it was launched three years ago following the collapse of Swissair.
The airline announced on Monday that it had reached agreement on the terms of a new collective labour contract with some of the trade unions representing ground staff.
swissinfo with agencies
Swiss was formed in 2002 by merging the remains of Swissair with the regional carrier, Crossair.
The Swiss government is the single biggest shareholder in the airline with a 20.4 per cent stake in Swiss.
The country's two largest banks, UBS and Credit Suisse, and the Zurich cantonal authorities each has a stake of around 10 per cent.
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