Swissair grounding leaves passengers stranded

By BARRIE CLEMENT

LONDON - Thousands of passengers have been stranded at airports all over the world following a decision by Swissair to suspend all flights indefinitely.

It is the first time a major airline has been forced to cease operations because of the slump in air travel since the atrocities in the US - although analysts believe it may not be the last.

The once-proud company admitted it could no longer afford to continue flying its 77 planes as oil companies demanded payment "upfront" for fuel.

Officials at Heathrow impounded two Swissair planes with passengers on board after a row over landing fees.

Concern also mounted over the future of Sabena, Belgium's national airline, which is part-owned by Swissair.

Patrick Jeandrain, spokesman for Swissair, said there was nothing the carrier could do for passengers left at airports.

"We cannot reimburse tickets or offer alternative flights. We are aware it is a disaster for our clients but at the moment there is nothing we can do because we have no money.

"We don't know whether we will be able to resume flights in the future but for the time being we cannot transport anybody. Everybody will have to make their own arrangements and we will not be able to do that for them. We obviously have many people waiting but all our planes are grounded."

At Zurich airport, the airline's home base, a message over the loudspeakers told hundreds of stranded passengers they would not be compensated for their worthless tickets and advised them to buy new tickets elsewhere.

It was expected there would be more job losses at the carrier on top of the 2,650 redundancies announced on Monday. Unions believe a total of 10,000 staff might have to go.

Services were suspended after Swissair filed for protection from creditors. The company will now rely on banks to provide funds to enable it to resume operations.

The shutdown meant that all services from the airline's home airports of Zurich and Geneva were suspended although aircraft already en route were ordered to continue.

Swissair also faced problems with fuel supplies. BP would only provide fuel for which payment had already been received and Shell stopped supplies altogether over unpaid bills.

Heathrow officials seized two Airbuses, an A321 and an A330 after claiming that landing fees totalling a reported £300,000, had not been paid. A spokesman for the airport said passengers on the planes disembarked and claimed they did not suffer any inconvenience.

Swissair is the latest and biggest casualty so far of the slump in air travel caused by the 11 September terrorist attacks. All major airlines have announced massive cutbacks and some have offered fares at minimal prices to lure passengers back.

Swissair claims the crisis is likely to cost it between £1.3 bn and £1.7 bn by the end of this year. The company said on Monday it was seeking legal protection from creditors while it underwent a radical restructuring exercise.

Under Swiss law, the move allows the company time to reorganise without being carved up by a bankruptcy court.

As part of a cost-cutting exercise the company withheld a payment of £83m to the Belgian airline Sabena, of which Swissair owns 49.5 per cent.

Sabena said its services had not been affected by Swissair's difficulties and it would handle the Brussels-Zurich route. But the Belgian government, which owns the majority stake in Sabena, was outraged by Swissair's attempt to seek protection from creditors and said it would go to court to force the Swiss company to provide the promised cash.

Before the announcement, trading in shares of Swissair and Crossair had already been suspended in Zurich until further notice. Under the changes, Switzerland's largest banks UBS AG and Credit Suisse Group will buy Swissair's 70 per cent stake in Crossair at the current market price.

A failed expansion strategy in 2000 also lost the airline around £1.2 billion. Reports that 650 jobs would be lost at bmi British Midland amounted to "speculation", according to the company.

The airline had already been reviewing its business before 11 September and planned to make an announcement before its winter timetable was introduced at the end of the month. Union representatives however expected there would be job losses.

- INDEPENDENT