Germany greenlights $1.66bn loan to Swiss and Edelweiss

The German government has cleared a CHF1.5 billion Swiss franc (USD1.66 billion) state-backed loan to Swiss (LX, Zurich) and its subsidiary Edelweiss Air (WK, Zurich), the Lufthansa-owned carrier confirmed in a statement on August 17. The Economic Stabilisation Fund (Wirtschaftsstablisierungsfonds – WSF) under the German Ministry for Economic Affairs and Energy approved the loan facility, 85% of which is guaranteed by the Swiss state. The approval was needed for a wider aid package for the Lufthansa group of airlines. The decison means that state aid packages in Austria, Belgium, and Germany can also be released to Austrian Airlines, Brussels Airlines and to Lufthansa itself. Swiss tentatively secured the bailout in April but had yet to see any funds, given that disbursement was conditional on Lufthansa securing its own rescue arrangement with the German state. As this had not yet happened by the beginning of August, Lufthansa helped Swiss out with an emergency bridge loan exceeding CHF200 million (USD221 million). Local media have reported that there has been some criticism in Switzerland over the use of state funds to bail it out as it is a German-owned company. “This support will enable Swiss and Edelweiss to weather the present crisis, which has been caused by factors beyond our industry’s control, and to continue to gradually resume our flight operations as we have been doing since June 15,” said Thomas Klühr, the flag carrier’s chief executive. Swiss posted a CHF266.4 million (USD295 million) loss in the first half of this year as passenger numbers dropped by 64% year-on-year and turnover by 55%. Austrian Airlines chief executive Alexis von Hoensbroech said on Twitter on August 17 that the WSF had just “given the green light for the state aid package,” adding: “The relief is great, because that is the last hurdle. We are very grateful that we have been helped in this historically unprecedented crisis and pandemic.”