The sin of pride

14 July 2003

Lufthansa could perhaps justify wading in if only to take out a competitor. But a deal would be messy, offering scraps for investors. There are unlikely to be many takers for the old Swissair. Switzerland Inc burned its fingers two years ago when it rescued the airline.

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Swiss International Airlines is thought to be casting around for potential rescuers as it seeks to avoid the fate of its predecessor: Swissair.

A Swiss newpaper reported over the weekend that Lufthansa had made a bid for the troubled successor company to Swissair. The German carrier denied having done so but refused to comment on reports that it was in discussions with Swiss.

The reports come as Swiss seeks to shore up its finances by cutting its route network and raising fresh capital. The airline's chief executive, Andre Dose, told a Swiss newspaper that it was in talks with potential creditors around the world as it seeks SFr500m.

We are talking not only with banks but with all exponents in the capital market, Dose said in an interview.

Swiss plans to prune its flight schedule to 30 intercontinental destinations from the current 40 and its European network will be reduced to 41 destinations from 56.

The airline, which received an injection of SFr2bn two years ago from a consortium of domestic investors led by UBS and Credit Suisse, has been hit by the downturn in air transport over the past 12 months.

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