Government May Aid Swissair

The Swiss government said Sunday it will meet to discuss plans to keep troubled airline Swissair aloft.

Swiss President Moritz Leuenberger--who is also the country’s transport minister--told reporters the session would take place this morning.

The government will decide at the meeting how to deal with the crisis facing the flag carrier, he said.

Swissair is facing bankruptcy after the Sept. 11 terrorist attacks in the United States triggered a passenger slump and threw the airline industry into chaos. The airline said losses could amount to billions.

Leuenberger made the announcement after four hours of talks with Swissair executives in Bern. Swissair chief Mario Corti said the talks had led to an “appreciation” of the situation facing the company. The Swissair board was expected to meet later Sunday.

Earlier, UBS and Credit Suisse Group said they would take part in a rescue package for Swissair. UBS, Switzerland’s largest bank, would put up 51% of the capital under a proposed rescue plan for Swissair, UBS spokesman Michael Willi told Dow Jones Newswires.

Credit Suisse would assume the remaining 49% of the capital, its spokesman, Andreas Hildenbrand, told Dow Jones.

“The focus is on a solution, based on a partnership between UBS and Credit Suisse,” Hildenbrand said. “But no formal decision has been taken yet.”

The spokesmen refused to disclose details of the proposals, and said they were still being considered. A UBS spokeswoman told Retuers the bank’s amount was about $618.8 million.

UBS did not take part in the Bern talks, saying it does not think the government should be involved.

“We think that it wouldn’t be right for the government to participate in a solution, and we don’t think that it would be necessary,” UBS Chairman Marcel Ospel said, citing regulatory reasons.

Last Friday, Corti warned of the severe damage to the Swiss economy if Swissair had to declare bankruptcy. A partial liquidation is among the possibilities under review, he said.

The losses since Sept. 11 have added to the pressure facing Swissair in recent months after its failed expansion strategy led to a loss of nearly $1.8 billion in 2000. In addition, a $123-million payout to Belgian airline Sabena is due today. Swissair has a 49.5% stake in Sabena.

Last week, Swissair announced 3,000 job cuts at its Gate Gourmet catering unit and said it would merge its airlines Swissair and Crossair, a European regional carrier, under the new holding structure Swissair Air Lines, but keep brands distinct. More layoffs are expected from this move, adding to the 1,250 job cuts announced earlier this year. Swissair employs about 70,000 people.