The Swiss Federal Council has proposed a support package for
Swiss aviation companies, which includes a government-backed guarantee for 85
per cent of loans totalling 1.5 billion francs (about €1.4 billion) for Swiss
and Edelweiss, according to the Lufthansa Group.
The proposal is subject to parliamentary approval, with a
consortium of Swiss banks providing the loans at market conditions for a term of
up to five years. The loans must be secured by Swiss and Edelweiss shares held
by Lufthansa, and can only be used for those two airlines under the condition
that no intra-group dividends are paid for the period during which the credit
is drawn.
The Swiss parliament is due to make a decision on the
package during a meeting on 4-5 May.
Lufthansa Group is continuing negotiations with governments
in Germany, Austria and Belgium for further support packages for its airlines,
though there has been some media speculation that the group may instead opt for
creditor protection, a form of bankruptcy protection, to allow it to
restructure if governments place too many conditions on providing loans. There
are rumours that Germany is proposing an equity stake and seats on Lufthansa’s
board in exchange for financial support.
Lufthansa said last month that it believes it could run into a liquidity shortage within the coming weeks unless it secures financial support.