Swissair facing liquidity crunch even after cash deal

Zurich, Oct 8: Stricken Swissair Group, flying at half capacity despite an emergency cash injection by the Swiss government, was left hanging in wait on Monday for a much needed bridging loan from banks.

A Zurich bankruptcy court judge overseeing affairs at the airline and its parent group after they obtained a debt moratorium on Friday. He said he would not be rushed into deciding whether the bank loan could proceed. Swiss banks Credit Suisse Group and UBS, which agreed last week a 1.4 billion Swiss franc deal to only rescue parts of the airline, are ready to lend the embattled group some 250 million francs in pursuit of that deal.

However, one of the conditions is that Swissair Group put up as collateral its so-far profitable non-airline subsidiaries such as the Gate Gourmet catering business, the Nuance airport retailer and the Atraxis IT- unit. But Swissair cannot agree to the transfer without permission from the court-appointed administrator and the judge now in charge of sorting out the worst corporate failure in Swiss business history.

The loan would help those units of Swissair Group that have not filed for creditor protection but still face a cash problem because their outstanding bills to the airline and holding group will not be paid for a very long time, if at all. Swissair Group Rainer Meier said the non-airline units had no cash problems at the moment but added it
would be “dramatic” if for instance the Atraxis unit ran out of money.

— Reuters