The momentum built up around Swissair's plans to take a 49 per cent stake in Sabena after the Belgian government granted an exemption on part of its flag carrier's social cost obligations, could yet falter as the opt-out comes under the scrutiny of the European Commission.
Sabena stands to save BFr650 million ($22.2 million) annually from an early March decision to cut the carrier's social security contributions. The move was trumpeted by Belgian transport minister Elio Di Rupo as 'an essential step toward an agreement' with Swissair, but a senior Commission official confirms: 'There is a Commission interest, yes. We have asked the Belgian government to inform us of the details.' Legal sources in Brussels believe the opt-out could constitute a form of state aid.
A Sabena spokesman says the carrier has no case to answer: 'The Belgian prime minister is confident that [the exemption] could not be seen as state aid because it's about labour conditions.' He also points out that the exemption would apply to other Belgian airlines, if they met the conditions which were laid down by a royal decree rather than government legislation.
The decree was first used in the mid-1980s in an attempt to reduce inflationary pressures in the economy - one of the main conditions involves a voluntary cut in wages. Prior to the inclusion of airlines this year, the optout had been offered to the fisheries sector and taxi drivers.
Sabena meets the conditions because it negotiated a two-year concessions package with its unions in August 1993 which saw wages cut by 17 per cent. However, this agreement expires in mid-1995 and salaries will return to pre-concession levels. The spokesman says this will not break the conditions of the opt-out.
Sabena has long complained that Belgian social taxes - among the highest in the world - reduce its competitiveness internationally. Swissair identified reduction of these costs as a major condition to it spending an estimated BFr6 billion ($205 million) on a 49 per cent stake. Sabena's attempt to base pilots in neighbouring Luxembourg, saving BFr900 million annually in social payments, was blocked by the Belgian government and the refusal of Luxair to cooperate in the project.
Alain Bandle, Swissair's chief negotiator in the Sabena talks, says he hopes to finalise negotiations before the Belgium elections on 21 May. But as parliament is due to be dissolved on 7 April, the Sabena spokesman suggests a decision could be made as early as the beginning of April.
Apart from concerns about how to structure any eventual deal, particularly to ensure it adheres to European Union merger and control rules, the main outstanding issue to be resolved is when Air France will sell its 66.7 per cent stake in Finacta, the holding company that owns 37.5 per cent of Sabena. Air France chairman Christian Blanc has already stated that he expects a return of FFr1 billion ($198 million) from the sale of the stake.
The Swissair Group is to close down its unprofitable charter operation Balair/CTA and reassign long-haul charters to Swissair and short-haul ones to Crossair. Crossair will also assume responsibility for all group operations of aircraft under 100 seats. Crossair will take over six or seven of Balair's MD-82s and Swissair's 10 Fokker 100s; it has indicated it wants to phase the Dutch-built aircraft out and replace them with British Aerospace's Avro RJs.
Source: Airline Business
