Cyclic Hotline
3rd Oct 2001, 21:50
Swissair to take to skies after aid deal
By Bradley Perrett, European airlines correspondent
LONDON (Reuters) - Grounded Swissair Group has announced a resumption of services, as a second European airline struggles to stay aloft in the wake of the sharp drop in demand for air travel since the U.S. attacks.
With the Swiss government offering 450 million Swiss francs in emergency financing, Swissair Chairman Mario Corti said the airline would be flying again on Thursday, but not at full capacity.
But the Belgian government also had to rush to supply its Sabena airline with a months' financing after the carrier applied for protection from creditors.
But Sabena creditor London City Airport detained one of the airline's planes and said it wanted clarification of the carrier's financial situation. Creditors seized Swissair planes on Tuesday before it suspended operations.
Meanwhile in the United States, Southwest Airlines Co said it was getting bookings at "very robust levels," although both Southwest and America West Holdings said their planes had flown largely empty after last month's hijacking attacks in New York and Washington.
The European Commission, hostile to European governments' old habits of periodically recapitalising unviable airlines, reiterated that it wanted to see no general state support for carriers suffering from the drop in demand since the attacks.
The drop has hit many airlines who were already suffering from an economic downturn.
KLM Royal Dutch Airlines which has already cut capacity by five percent said on Wednesday it would have to implement further schedule reductions, which it would announced on Thursday.
"The clear drop in demand of the order of magnitude we are seeing now has nothing to do with just the economic slowdown but is caused by the fear of flying," Chief Executive Leo van Wijk said.
And British Airways Plc said October bookings indicated a 25 to 30 percent fall in traffic, while its passenger business in September had dropped by 22 percent from a year earlier.
GLOBAL PATTERN
A global pattern in the industry shows that carriers that were struggling before the attacks are in crisis now.
In New Zealand a source familiar with the matter said the government would buy a stake in Air New Zealand Ltd, which has had a long-standing need for more money, as Swissair and Sabena have.
However, some of the healthiest members of the industry, European no-frills carriers, say they are not doing too badly at all. One of them, easyJet Plc, applied to move in on a UK domestic route that high-cost British Airways (LSE: BAY.L - news) has decided to withdraw from since the attacks -- London Heathrow to Belfast.
Southwest, the global leader in no-frills aviation, offered before-and-after traffic figures that showed exactly how much of its traffic had disappeared. In the days before the attacks, Southwest's planes had been 66.8 percent full, the carrier said. Afterwards, only 45.4 percent of seats were taken.
America West's figures were similar: 58 percent load factor before that attacks and 45 percent after them.
EMERGENCY FUNDING FOR SWISSAIR
Such traffic falls pushed Swissair over the edge on Monday, when banks moved to take control of most of its airline activities. On Tuesday, before that could happen, the company ran out of cash and suspended operations.
Emergency meetings on Wednesday resulted in Swiss Finance Minister Kaspar Villiger saying the government was offering 450 million Swiss francs ($280 million) in emergency financing to help Swissair operate until October 28.
Swissair also has extensive interests in other aviation-related areas, such as airport retailing and catering.
Swissair's shares were down 84 percent, reflecting investors' assumptions that the company's equity had been wiped out and that even debtholders may end up with little.
Other aviation shares in Europe and Asia were mixed but two U.S. carriers, Continental Airlines Inc and US Airways Group, were up around 10 percent by 1630 GMT.
SABENA GETS MONEY, SEEKS PROTECTION
Because Swissair had failed to supply affiliate Sabena with fresh capital on Monday, the Belgian airline has decided it needs protection from creditors.
Belgian Public Enterprises Minister Rik Daems said the government would pitch in with 125 million euros ($115 million) of temporary financing -- but the administration had to be wary of EU rules that generally forbid subsidies and state recapitalisations.
A spokesman for the EU's executive, the European Commission, said it had met with the Belgian government on the matter but no decision had been taken.
The spokesman reiterated that the Commission opposed general state support for airlines.
By Bradley Perrett, European airlines correspondent
LONDON (Reuters) - Grounded Swissair Group has announced a resumption of services, as a second European airline struggles to stay aloft in the wake of the sharp drop in demand for air travel since the U.S. attacks.
With the Swiss government offering 450 million Swiss francs in emergency financing, Swissair Chairman Mario Corti said the airline would be flying again on Thursday, but not at full capacity.
But the Belgian government also had to rush to supply its Sabena airline with a months' financing after the carrier applied for protection from creditors.
But Sabena creditor London City Airport detained one of the airline's planes and said it wanted clarification of the carrier's financial situation. Creditors seized Swissair planes on Tuesday before it suspended operations.
Meanwhile in the United States, Southwest Airlines Co said it was getting bookings at "very robust levels," although both Southwest and America West Holdings said their planes had flown largely empty after last month's hijacking attacks in New York and Washington.
The European Commission, hostile to European governments' old habits of periodically recapitalising unviable airlines, reiterated that it wanted to see no general state support for carriers suffering from the drop in demand since the attacks.
The drop has hit many airlines who were already suffering from an economic downturn.
KLM Royal Dutch Airlines which has already cut capacity by five percent said on Wednesday it would have to implement further schedule reductions, which it would announced on Thursday.
"The clear drop in demand of the order of magnitude we are seeing now has nothing to do with just the economic slowdown but is caused by the fear of flying," Chief Executive Leo van Wijk said.
And British Airways Plc said October bookings indicated a 25 to 30 percent fall in traffic, while its passenger business in September had dropped by 22 percent from a year earlier.
GLOBAL PATTERN
A global pattern in the industry shows that carriers that were struggling before the attacks are in crisis now.
In New Zealand a source familiar with the matter said the government would buy a stake in Air New Zealand Ltd, which has had a long-standing need for more money, as Swissair and Sabena have.
However, some of the healthiest members of the industry, European no-frills carriers, say they are not doing too badly at all. One of them, easyJet Plc, applied to move in on a UK domestic route that high-cost British Airways (LSE: BAY.L - news) has decided to withdraw from since the attacks -- London Heathrow to Belfast.
Southwest, the global leader in no-frills aviation, offered before-and-after traffic figures that showed exactly how much of its traffic had disappeared. In the days before the attacks, Southwest's planes had been 66.8 percent full, the carrier said. Afterwards, only 45.4 percent of seats were taken.
America West's figures were similar: 58 percent load factor before that attacks and 45 percent after them.
EMERGENCY FUNDING FOR SWISSAIR
Such traffic falls pushed Swissair over the edge on Monday, when banks moved to take control of most of its airline activities. On Tuesday, before that could happen, the company ran out of cash and suspended operations.
Emergency meetings on Wednesday resulted in Swiss Finance Minister Kaspar Villiger saying the government was offering 450 million Swiss francs ($280 million) in emergency financing to help Swissair operate until October 28.
Swissair also has extensive interests in other aviation-related areas, such as airport retailing and catering.
Swissair's shares were down 84 percent, reflecting investors' assumptions that the company's equity had been wiped out and that even debtholders may end up with little.
Other aviation shares in Europe and Asia were mixed but two U.S. carriers, Continental Airlines Inc and US Airways Group, were up around 10 percent by 1630 GMT.
SABENA GETS MONEY, SEEKS PROTECTION
Because Swissair had failed to supply affiliate Sabena with fresh capital on Monday, the Belgian airline has decided it needs protection from creditors.
Belgian Public Enterprises Minister Rik Daems said the government would pitch in with 125 million euros ($115 million) of temporary financing -- but the administration had to be wary of EU rules that generally forbid subsidies and state recapitalisations.
A spokesman for the EU's executive, the European Commission, said it had met with the Belgian government on the matter but no decision had been taken.
The spokesman reiterated that the Commission opposed general state support for airlines.