Swissair to fly again; future still uncertain

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NEW YORK -- Swissair received a cash infusion -- about $278 million -- from the Swiss government that will let it resume a limited flight operation Oct. 4, an airline spokeswoman in the U.S. said.

However, the future of the airline is still very much up in the air.

Because the cash-strapped carrier was unable to reach an agreement with ARC for covering refund requests for U.S. agents, processing of Swissair refunds and other transactions ceased with the reporting period ending Sept. 30.

ARC told agents Oct. 3 that it will "continue to work with Swissair toward the goal of an eventual resumption in processing."

In the meantime, Swissair transactions included in agent sales reports will be returned. ARC said agents could contact the airline directly.

The airline is updating its status daily at www.swissair.com, and advising customers to make alternate travel arrangements.

Also unclear is the fate of Sabena, Belgium's national carrier, in which Swissair had a 49% stake. It was counting on a promised investment by Swissair and still is dealing with a wildcat strike by its pilots.

Sabena said Oct. 3 that it "has the necessary cash to guarantee normal activities for the time being," but went to court asking for bankruptcy protection as the Belgian government considered a monthlong bridge loan to the carrier.

Swissair's collapse came shortly after its parent holding company unveiled a restructuring plan under which two Swiss banks, UBS and Credit Suisse, would acquire Swissair's 70% stake in Crossair, a low-cost regional carrier, for over $600 million. Crossair would then take over about two-thirds of Swissair operations.

The banks also were to lend the Swissair Group $155 million to finance the airline operations until they could be sold.

But the money did not come soon enough, a spokesman for the airline in Zurich, Switzerland, confirmed, as Swissair was forced to ground its fleet Oct. 2 because it ran out of cash.

Crossair, however, continues to fly, and was beginning to operate some of Swissair's intra-European routes and to accept Swissair tickets, subject to available space.

Swissair's cessation of services affected about 19,000 passengers on 262 flights, and stranded over 3,000 passengers at Zurich Airport, the carrier said.

Urs Eberhard, director of Switzerland Tourism North America, said, "We are quite worried about the latest developments and are aware that Swissair's filing for bankruptcy protection will have drastic effects not only on the tourism business, but also on Switzerland's desirability as a place of business in general."

Tourism is Switzerland's third-largest export industry, Eberhard said, generating annual sales of $8 billion. Airlines bring Switzerland about 40% of its international guests, he added, amounting to about 4.5 million people.

Swissair was also a major marketing partner of Switzerland Tourism.

Eberhard said, "Swissair has invested a great deal of manpower and marketing resources in promoting and positioning Switzerland as a country for traveling, holidays and conferences. This potential gap has to be closed in order to keep our country competitive in the areas of holidays and travel."

Eberhard said the board will begin discussions with Crossair as soon as possible.

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