As "Vremya Novostei" reports, after two years of negotiations, the Swiss government agreed to sell a 20 percent stake in the company to Germany's Lufthansa.
At a special meeting in Frankfurt am Main, the management of the German company finally approved the latest offer from the Swiss side and agreed to pay $409 million for the stake. In Zurich, the remaining Swiss shareholders also approved the deal. As AFP reports, they indicated that they are ready to part with their shares. The German side is counting on this and is ready to soon increase its share by buying shares from the Zurich authorities (10.2%), the two banks UBS and Credit Suisse Group (together they own 20.4% of Swiss shares), as well as stakes in companies Nestle, Novartis, and Roche.
According to experts, consolidation will allow the Swiss carrier to avoid a crisis period. The combined company will be able to save about 160 million euros annually starting in 2007, according to a joint statement from the companies. "As part of the Lufthansa group, Swiss will be able to maintain its existing ties with the rest of the world and possibly expand them," commented Swiss CEO Christoph Franz on the deal.
According to the agreement, Swiss will keep its existing brand, and its management will have some autonomy in making operational decisions on running the company. "Swiss will remain Swiss, even together with Lufthansa," said the head of the German company, Wolfgang Mayrhuber, after signing the agreement in Zurich. However, this is unlikely to save the Swiss carrier from reorganization. The German side insists on cutting about a thousand jobs. Most of Swiss's six-thousand-strong staff has already threatened to go on strike if the Germans do not drop the idea.
The future of Zurich International Airport also remains unresolved. When concluding the agreement, the Swiss government set a condition that the airport must retain its international status as a hub for transatlantic flights. Since Lufthansa is heavily tied financially to the international airports of Munich and Frankfurt, located not far from Zurich, the Swiss airport may lose its position. However, the Swiss government remains optimistic. "The alliance between Swiss and Lufthansa will, in the long term, ensure conditions for the existence of Switzerland's airlines and the maintenance of air transport infrastructure and jobs," its official statement said.
In recent years, Swiss has suffered huge losses and has been teetering on the brink of bankruptcy. The carrier's business was collapsing practically before our eyes. Since 2002, when the company was formed on the ruins of bankrupt Swissair, shareholders have not stopped investing in it. According to the BBC, the total financial injections over these few years reached $3.5 billion. "Acting alone would mean allowing Swiss to die slowly. The state could not provide additional support from public funds," said Swiss Finance Minister Hans-Rudolf Merz. In his opinion, an alliance with Lufthansa is the best solution.