Information source: http://news.ft.com/ft/gx.cgi/ftc?pag...te=IXLZHNNP94C


There is an ominous ticking sound coming from the hold of Swissair, the Swiss airline. With debt at 6 times a fragile SFr1.1bn in equity, it can waste little more time jettisoning loss-making French and Belgian subsidiaries. So far, no suitors have appeared for AOM and Air Liberté, the French carriers. They are bleeding about SF60m a month. Nor has Swissair's French partner, Marine-Wendel, pitched in. Its chief, head of France's employers' federation, is balking at political pressure to save more than 4,000 jobs.

Swissair's Mario Conti, too, must resist the demands of job security. At the latest, he should cut out of France as promised by the end of this month. He should also abandon Belgium's Sabena, which lost SFr500m last year - Swissair has a 49 per cent share in its future losses. He showed a glimpse of his grit hacking off an infected toe, in the shape of Air Littoral. Now bigger limbs must go.

But the costs of shutting down three airlines, to the extent they exceed last year's provisions, may drain Swissair's equity like a hole in the fuel tank. Meanwhile, planned asset sales, including SFr700m of property and the Atraxis IT system, run the risk of looking like distressed disposals. Sales of its most attractive non-core businesses, such as Gate Gourmet, would leave Swissair as little more than a minor carrier hemmed in by the Alps. If it cannot enter a big alliance such as Oneworld, or find a buyer, Swissair will need more capital. Mr Conti's friends in corporate Switzerland are the only investors likely to supply it.