SIMON WARBURTON / PARIS AND HERMAN DE WULF / ANTWERP
Sabena troubles end up in court as government seeks more money from Swissair, while CityBird battles for survival
Belgium's major civil aviation players are entering a critical phase as lack of funds and arguments threaten to tear apart the country's financially fragile airlines.
Flag carrier Sabena and CityBird are fighting for their existence, with the former going to court with partner Swissair and the latter filing for bankruptcy protection. Only low-cost carrier Virgin Express seems likely to end up in good health following a severe cost-cutting programme.
The latest twist in the Swissair Group/Sabena troubles has seen the Belgian Government take the Swiss carrier to court in an effort to force it to continue funding Sabena.
Swissair - 49.5% owner of Sabena with the Belgian state owning the rest - offered to plough €275 million ($233 million) into its struggling partner, along with a €30 million loan, in return for backing out of its earlier agreement to up its stake to 85%.
The Belgian Government immediately rejected the offer, however, saying that Swissair owes it €529 million over the 1997 purchase of 34 Airbus aircraft. The government says that, if this is not paid, it will seek €384 million compensation.
Sources in Brussels say that the deal's rejection by the state was a "logical evolution" and that "the [Swissair] proposals are unrealistic".
But Swissair Group says it is "surprised and dismayed" by the government's decision "to focus on litigation and not the negotiating table". Chairman Mario Corti says: "Swissair Group is not willing to finance loss-making airlines indefinitely." He adds that if its proposals are not accepted, Sabena's future "looks increasingly in doubt".
To save the airline, the government wants to sell profitable Sabena subsidiaries Sabena Technics, Sabena Catering, Sabena Ground Handling and Sabena Hotels.
Meanwhile, Sabena's board has appointed Mark Dunkerley chief as operating officer. Dunkerley was formerly British Airways senior vice-president Latin America & Caribbean, and president and chief operating officer of handling company Worldwide Flight Services (formerly AMR Services). He will be responsible for Sabena Flight Operations, commuter subsidiary DAT, Sabena Ground Handling and, until an investor is found, Sabena Catering and Cargo Handling.
Sabena is embroiled in arguments on a second front as fellow Belgian airline CityBird blames part of its woes on the Belgian flag carrier's decision to end a long-term wet lease of two BoeingMD-11s. The deal, ended in April, forced CityBird to return its three MD-11s to Boeing Capital at a cost of $42 million and a loss of Bfr2.5 billion ($52.5 million) a year, according to CityBird.
CityBird filed for legal protection from its creditors on 4 July, which will protect it until 26 September. The move followed "unequal competitive conditions in the long-haul market". The airline continues to fly, focusing on short and medium-haul sectors.
Source: Flight International
