Swissair to sell assets

July 12, 2001 Posted: 0813 GMT

LONDON (CNN) -- Swissair Group, Switzerland's loss-making airline, said on Thursday it plans to sell assets worth 3 billion Swiss francs ($1.7 billion).

Executive Chairman Mario Conti said the options included selling aircraft, stakes in reservation system Galileo and data network operator Equant, in a bid to return to profitability.

The Swiss company, which ejected its chief executive and chairman on January 23, is reversing an expansionist policy to build an airline alliance around Swissair through the acquisition of stakes in regional carriers.

That policy proved to be costly as losses soared. The Zurich, Switzerland-based company made a 2000 net loss of 2.9 billion Swiss francs.

To date the sale of the family silver has raised more than 900 million francs and the latest asset sales should return the airline's 2001 earnings before interest and taxes to "significantly" above last year's level, Conti said.

But debts soared to 7.8 billion francs at the end of June compared with 6.9 billion at the end of last year, the company said.

Swissair secured a 1 billion francs bridge financing deal with CSFB, the investment banking arm of Credit Suisse Group, Citibank and Deutsche Bank, the company said.

In outlining his plans for the airline's future, Conti said the airline will focus on its Swissair and Crossair brands.

The Swiss airline, which has earned the wrath of the Belgian government and flag-carrier Sabena, said it would keep its minority 49.5 percent stake in Sabena, but hoped to find an agreement to release it from the deal that forces Swissair to increase its stake to 85 percent in the future.

Sabena and the Belgian government have filed lawsuits claiming more than 1 billion for canceled plane orders and loans to finance loss-making Sabena.

Shares in Swissair rose 7.6 percent to 98.20 francs in early London trade. The company's stock price has fallen 65 percent from a high of 262 francs in January.

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