=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2003/05/06/f= inancial1700EDT0277.DTL ---------------------------------------------------------------------- Tuesday, May 6, 2003 (AP) Troubled Swiss carrier holds assembly amid talk of Lufthansa merger (05-06) 14:00 PDT BASEL, Switzerland (AP) -- Directors of Swiss International Air Lines sought to reassure anxious shareholders Tuesday that the carrier would win its struggle for survival, amid mounting speculation about a possible linkup with Germany's Lufthansa. Hopes about a possible merger with Lufthansa pushed Swiss shares up 56.3 percent to 7.50 Swiss francs ($5.56) on Tuesday, following a 20 percent jump on Monday. Lufthansa declined to comment on the market rumors, but Swiss executives confirmed the talks -- although stressing that the discussions were about general industry matters. "We are open to everything, are holding talks, and intend to play an important role in the (industry's restructuring) process," board president Pieter Bouw told the company's annual meeting in Basel. Rumors about a merger between Swiss and Lufthansa have circulated for weeks. That would enable Swiss to join Star Alliance, a network that consists of 16 carriers, including Air Canada and United Airlines. However, many analysts are skeptical about a merger because of Lufthansa's own difficulties in the current environment. Swiss lost 980 million francs ($706 million) in 2002, forcing the assemb= ly to approve a motion to cut the company's capital to prevent net equity falling below half the level of the share capital -- at which point companies run into Swiss legal problems. Shareholders agreed to cut the par value of shares from 50 francs ($36) to 32 francs ($23). Swiss CEO Andre Dose said the airline hoped the situation would return to normal in the summer months, but he warned that sales would likely be lower than last year. Last Friday, Swiss announced a package of cost-cutting plans, including spinning off regional operations into a new low-cost subsidiary to be called Swiss Express, and cutting 10 percent from the company's payroll of 1 billion Swiss francs ($774 million). Swiss is the successor to Swissair, which collapsed in 2001 under a mountain of debt. =20 ---------------------------------------------------------------------- Copyright 2003 AP