Swiss Government Agrees to Fund National Airline

The Swiss government and industry leaders agreed Monday to spend $2.65 billion to create a new national airline on the ruins of Swissair, wrecked by the air travel chaos following the U.S. terrorist attacks.

“We are happy and relieved that this effort has succeeded,” said President Moritz Leuenberger in disclosing the combination of government and industry financing.

At least 9,000 jobs in the Swissair group are expected to be eliminated under the plan. Other options could have resulted in up to 27,000 job losses. Swissair, which has a global work force of about 70,000, announced this month it was cutting 9,000 jobs.

Villiger said the salvage operation, which will put the profitable Crossair subsidiary in charge of the Swissair group, would be financed one-third by national and local government and two-thirds by Swiss companies.

The package involves some of the biggest companies in Switzerland, including food and beverage giant Nestle as well as drug firms Novartis and Roche Group.

No name has yet been announced for the new airline.

The plan is to keep 26 jetliners flying to the United States, Asia and Africa and 26 shorter-haul airliners for European flights, as well as 82 smaller planes from the Crossair fleet, the government said.

Leuenberger said the federal government was putting up $625 million in a bridge loan to assure flights on a reduced schedule until March while the restructuring takes place. The government also will invest $375 million in the new company.

For most of the year, the company was trying to recover from a failed expansion strategy that led to a loss of $1.8 billion in 2000. The U.S. attacks will cost the group $1.9 billion to $2.3 billion more by the end of this year, the airline has said.

Swissair, which filed for protection from creditors this month, was forced to ground its fleet for two days because it had no cash to pay fuel and landing bills. This compelled the government to provide $280 million to keep it in the air until Sunday, when Crossair takes over.