The Swiss Federal Council has recommended a comprehensive support package for Swiss airlines SWISS and Edelweiss, part of the Germany’s Lufthansa Group.
The council will propose the loan guarantees to the Swiss parliament. Pending parliament approval, the two carriers will receive guarantees from the Swiss Bund for 85% of the loans totaling 1.5bn Swiss francs (approx. €1.4bn).
A consortium of Swiss banks will grant the loans at market conditions for a term of up to five years. The Swiss Bund guarantees 85% of the loans and they are secured by SWISS and Edelweiss shares held by Deutsche Lufthansa AG.
The funds may only be used at SWISS and Edelweiss. No intra-group dividend payments must be made for the period during which the credit facility is drawn down.
The Executive Board and the Steering Committee of the Supervisory Board of Deutsche Lufthansa AG approved the financing transaction at their meetings today.
The guarantees are subject to the approval of the Swiss parliament, which will decide on the matter at its meeting on 4 and 5 May.
Apart from the credit agreement in Switzerland, the Executive Board of Deutsche Lufthansa AG is continuing to negotiate intensively with the governments in Germany, Austria and Belgium in order to secure the Group’s solvency for the long term.
A statement from Swiss said: “SWISS and Edelweiss are grateful for the Federal Council’s decision to provide Swiss aviation with the necessary liquidity to survive the impact of the corona crisis. With a bank loan of CHF 1.5 billion, 85% guaranteed by the government and subject to strict conditions, support from Lufthansa, the parent company, and drastic savings measures already adopted by SWISS and Edelweiss, the liquidity required for both airlines should be assured.
“SWISS and Edelweiss welcome the fact that the financial support negotiated at short notice with the Swiss government and the bank consortium can now be presented to the Federal Assembly for approval.
“The loan, which will also benefit airline-related operations, would allow the gradual restoration of vital passenger and cargo links between Switzerland and the rest of the world, so important in terms of the national economy.”
SWISS will not be commenting further on this matter at the present time.
