Press Releases

Swissair granted creditor protection

The Associated Press
Friday October 12, 2001

ZURICH, Switzerland — Swissair has been granted protection from creditors in the United States and Canada, allowing it to obtain fuel for its North Atlantic flights, the airline said Thursday. 

Switzerland’s largest bank, meanwhile, said it had been contacted about Swissair by the U.S.-based buyout firm Texas Pacific Group. 

“We are mulling over how to answer,” said Larissa Alghisi, spokeswoman for UBS AG. 

The decision to file for Chapter 11 bankruptcy protection in North America followed a similar move within Switzerland. Under Chapter 11, a company can continue to operate its business free of creditor claims while it develops a financial reorganization plan. 

The airline was forced to ground its jets for two days last week as it didn’t have enough money for fuel and landing fees. The plunge in air traffic after the Sept. 11 terror attacks in the United States made it impossible for the airline to stay intact, having lost $1.8 billion last year because of a disastrous expansion policy. 

The airline announced a new, reduced timetable valid through Oct. 27, when its regional subsidiary Crossair takes over in a shake-up organized by Swiss banks UBS and Credit Suisse. 

It envisages 165 flights per day – including the Geneva to New York connection, compared to 302 previously. 

UBS said Wednesday that the $832 million that it had jointly offered with Credit Suisse Group would need to be increased if the airline is to be saved. 

 

The German financial news agency VWD said that Texas Pacific planned to offer $7 billion for the Swissair Group. Swissair and Texas Pacific declined to comment on the report. 

Alghisi declined to go into detail about Texas Pacific’s approach to UBS. 

Texas Pacific, which has a reputation for tightening financial controls and turning around troubled companies, manages a series of private equity funds with over $7 billion in committed capital. 

Texas Pacific has yet to contact the estate administrator, which oversees Swissair’s legal proceedings on creditor protection and has to approve decisions about the group’s assets, a spokesman said.