Confederation to receive 63.67 million francs for its earlier share in Swiss
Bern, 21.03.2008 - Lufthansa will pay the Confederation CHF 63.67 million for the package of shares in Swiss, which it exchanged for a debtor warrant three years ago. The sum spent by the Confederation to launch Swiss is thus reduced from CHF 600 million to CHF 536.33 million. The cash amount transferred by Lufthansa is classed as extraordinary income and will therefore be used for the purposes of debt reduction in accordance with the Financial Budget Act.
Three years ago, as part of the takeover of Swiss by Lufthansa, the major shareholders transferred their stock to AirTrust AG (total shares of the large shareholders: 45,339,948; Confederation shareholding: 10,714,286 or 23.6 per cent). In exchange they received a debtor warrant instead of money. The value of this debtor warrant was linked to the performance of the Lufthansa share price in relation to an index of competitor share prices. British Airways (40 per cent), Air France/KLM (40 per cent) and Iberia (20 per cent) were selected as reference companies. A contractual compensation arrangement was agreed with the major shareholders in the event that the Lufthansa share price should perform better than those of the competition by the date of 20 March 2008. The compensation was to be calculated on the basis of the arithmetical average of the market closing rates of Lufthansa shares compared to those of the reference shares over the last 30 trading days.
In 2001, the Confederation authorised loans amounting to CHF 2,050 million so that flight operations could be resumed by a new national airline after the grounding of Swissair. The Confederation used CHF 1,169 million of an authorised loan of CHF 1,450 million in payments to maintain Swissair and Crossair flight operations. The Confederation then took a stake in the new national airline, Swiss, in the anticipated region of CHF 600 million. The resulting total expenditure therefore amounts to CHF 1,769 million.
After payment of the debtor warrant by Lufthansa, the Confederation's provisional commitment in the resumption of flight operations by Swissair and the launch of its successor Swiss amounts to approximately CHF 1,705 million. The final amount will only be known when bankruptcy proceedings have been completed by the liquidator. From today’s standpoint, a further reduction is quite probable (recognition of any reserves of liquid assets in connection with federal loans provided and liquidation dividends).
The government became involved in Swiss because direct connections to the world’s most important business centres are immensely important for the political, economic and social development of our country. The abandonment of Swissair flight operations and the highly probable subsequent collapse of other Swissair Group companies would have had an enormous impact on employment. A mass layoff of staff would have come at a very inopportune moment just as the labour market was at a critical turning point. In its considerations relating to Swissair, the Federal Council also took into account the major importance of Zurich and the surrounding area for the country’s economy.
One of the prerequisites for the federal government’s involvement was that all the parties interested in the existence of a national airline with intercontinental connections should be involved in finding a solution. It was clear from the outset that the commitment of the government would be for a limited period only. In a liberalised market such as that of aviation, the state should seek to create an optimum framework. However, its long term tasks do not include assuming entrepreneurial risks.
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Federal Department of Finance
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