Swissair bailout approved

BERN, Switzerland -- A multi-billion dollar bailout of troubled airline Swissair has been approved by the federal government.

The aid package is made up of cash pledged by federal and local governments as well as Swiss industry.

Swissair collapsed in early October after the airline industry plunged into chaos in the wake of the September 11 terrorist attacks on the United States.

Under the rescue package approved on Monday the state will provide the company with $1.2 billion and the private sector will invest $1 billion.

Local governments in the cities of Zurich and Basle confirmed on Monday they will contribute a total of $200 million.

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Swiss President Moritz Leuenberger was expected to announce early this week which private sector firms had pledged funds for the challenge.

Last week Leuenberger said the government would give Swissair financial aid if the country's business community did the same.

The country's fourth largest banking cooperative, Raiffeisen, has said they would donate $16 million.

Swissair filed for bankruptcy protection earlier in October after an expansion programme incurred massive losses.

The airline was forced to ground its entire fleet for two days after it could not pay fuel and landing bills.

The government has given the airline $280 million to keep flights running until the end of October.

Under the rescue plan Swissair's regional subsidiary Crossair will then to take over 26 long-haul and 26 short-haul flights in order to limit damage to the economy, estimated at up to $2.5 billion.

Switzerland's biggest banks, Credit Suisse and UBS, have said they cannot afford to donate any more funds, after providing a $940 million rescue package to buy Swissair's 70 percent share of Crossair in early October.

The Swissair group are expected to cut between 9,000 and 27,000 jobs when Crossair takes over.