Reports say that little stands in the way of the government approving on Tuesday Lufthansa’s takeover bid for the national airline, Swiss.This content was published on March 20, 2005 - 16:29
Newspapers on Sunday said the deal brought more advantages than disadvantages for the airline and Switzerland. And a majority of the Swiss public support the deal.
According to the NZZ am Sonntag, sources close to major shareholders say Swiss could cut costs by SFr300 million ($258 million) a year through synergies with the German airline.
The newspaper also reported that Lufthansa was prepared to offer Swiss two long-haul aircraft, which would create 500 new jobs in Switzerland.
However, it is a carrot-stick approach tied to the successful conclusion of talks between Swiss management and pilot unions to reduce costs.
Swiss CEO Christoph Franz told unions last week that he could provide no job guarantees for the airline’s 6,000 employees following a link-up with the German carrier.
According to the Sunday press, Lufthansa is prepared to pay SFr60–70 million to small shareholders and only a "symbolic" sum to large shareholders, which include the government (20.4 per cent) and companies such as Nestlé and UBS.
In return, the large shareholders would receive paybacks based on an above average development of Lufthansa’s share price.
The reports said Lufthansa was willing to pay SFr500 million for Switzerland’s national carrier while taking over SFr600 million in debts and off-balance obligations worth a further SFr500 million.
The SonntagsZeitung said Lufthansa had provided guarantees that Swiss would be an independent subsidiary with its own management and board, and would receive a seat on Lufthansa’s regulatory body.
The newspaper said that if the deal fell through, the Swiss board would need to raise SFr600 million in new capital for next year.
Since the airline was launched in 2002, the government has invested SFr2 billion of taxpayers’ money, and an equal amount has come from the private sector.
In a poll carried out by SonntagsBlick, 53 per cent of those surveyed said they were in favour of the sale, and 57 per cent said they believed Swiss could not survive in its current form.
swissinfo with agencies
Swiss has a current market value of around SFr500 million.
The airline's book value is estimated at SFr850 million.
In 2004 it made a net loss of SFr140 million.
In the same year, Lufthansa made a provisional net profit of €400 million (SFr620 million).
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