SWISS early terminates its bank loan guaranteed by the Swiss State
Swiss International Air Lines has terminated in advance the bank loan facility which had been 85% guaranteed by the Swiss Confederation, the company announced today. The support was originally scheduled to end in 2025. Lufthansa Group, its parent company, will cover future financing needs through the capital markets.
The airline has never used more than half of the total amount available through the loan. On the other hand, it paid a total of 60 million Swiss francs in fees and associated interest.
In this regard, the company highlighted the support provided to many of its employees during the COVID-19 pandemic. “SWISS has fully complied at all times with the whereabouts conditions which were linked to financial support from the Swiss state and, after its restructuring, has now returned to financial stability,” they said.
The early termination of the credit line took place in the context of a consolidated recovery in supply and demand on the air transport market. The easing of restrictions and the consequent increase in the number of operations have enabled a positive evolution of the company’s liquidity.
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Reto Francioni, Chairman of the Board of SWISS, said the pandemic “triggered the biggest crisis the aviation sector has ever seen worldwide”. “With this great collaborative achievement, the Swiss Confederation, the banks and SWISS have jointly ensured that one of the most vital companies for the Swiss economy was able to cope with and contain the acute threat it faced in because of the crisis,” he added.
In March 2020, when the first measures to restrict air travel were taken, the company implemented cost-saving measures to reduce the loss of liquidity. The Lufthansa Group has contributed with 500 million Swiss francs since then. The state aid, controlled by the Swiss Aeronautical Foundation, required the airline to grow proportionally to other airlines in the parent company.
In mid-2021, Swiss International Air Lines began a restructuring process. It would have reduced its aircraft fleet by 15% and its workforce by around 1,700 full-time positions by the end of the year.
“We have now been able to bring SWISS back to financial stability and generated positive cash flow in the first quarter of this year,” said Markus Binkert, the company’s chief financial officer. “This allows us to exit Swiss state support in advance and meet our future financial needs on the capital markets via the Lufthansa Group,” he concluded.
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