Swissair halts flight operations after creditors move against airline
Tuesday, October 2nd 2001, 12:00 am
By: News On 6
ZURICH, Switzerland (AP) _ Swissair shut down flight operations Tuesday after its schedule was thrown into turmoil by creditors moving against the financially troubled airline.
The company said in a statement it was forced to halt flights because it had been unable to scrape together enough cash to keep operations going. It gave no indication how long it would be before it could resume flying.
Earlier Tuesday, two Swissair planes were blocked by authorities at London's Heathrow airport pending payment of fees, and flights to most other European destinations were canceled or delayed, officials said.
One of the Airbuses held in London was later released and it returned to Zurich as a regular flight two hours late. The other plane was a flight to Geneva, but that was canceled, Geneva airport officials said.
Swissair filed for protection from creditors Monday, a step short of bankruptcy.
The airline also had problems with fuel supplies. The petroleum firms BP, Shell and Esso said they stopped providing fuel to Swissair planes in Geneva and Zurich because of unpaid bills totaling millions of dollars.
Swissair said it canceled its morning flights to Belgium for fear its planes would be seized. Later in the day it was announced that Sabena, the Belgian carrier in which Swissair owns a 49.5 percent stake, would handle the Brussels-Zurich route.
The Swissair Group _ of which Swissair is a part _ failed Monday to make a $123 million payment to Sabena, which also has severe financial problems. Swissair had promised in July to make the payment under threat of a lawsuit.
Outraged by Swissair's attempt to seek protection from creditors, the Belgian government, which owns the majority stake in Sabena, said it will go to court to force the Swiss company to provide the promised cash.
The promised payment is Swissair's share of the first installment of a recapitalization plan for Sabena that Swissair agreed to under pressure this summer.
Swissair spokesman Patrick Gendrin declined to say what payments were owed in London, but other Swissair officials, who spoke on condition of anonymity, said they concerned unpaid landing fees. Swissair owes the airport $443,700, they said.
On Monday Swissair announced a massive overhaul that will put regional subsidiary Crossair in charge. The move gives the airline time to reorganize without being carved up in a bankruptcy court.
The airline, whose situation worsened dramatically after the Sept. 11 terror attacks on the United States, already was trying to recover after its failed expansion strategy led to a loss of $1.79 billion in 2000.
The airline said the U.S. attacks would cost the Swissair Group $1.9 million to $2.3 billion by the end of this year.
Before the announcement, trading in shares of Swissair and Crossair had already been suspended in Zurich until further notice.
Share values of Switzerland's two largest banks, which were involved in the Swissair overhaul, dropped in trading Tuesday.