Herman de Wulf/BRUSSELS
Sabena has called a crisis meeting of its shareholders, SAirGroup and the Belgian Government in a bid to stave off a financial crisis threatening its future. Belgian Prime Minister Guy Verhofstadt confirms that talks are ongoing about the flag-carrier's mounting problems .
Article 103 of Belgium's legislation on commercial practices effectively demands that any company that has spent more than half of its capital seek to redress the situation either by declaring itself bankrupt or re-capitalising.
The 8 February meeting has been called in the wake of the worst results in Sabena's history, which saw estimated year losses in 2000 amount to BFr7 billion ($165 million).
Rising fuel prices, low yields, an unfavourable dollar exchange rate and higher than estimated cost for replacing an all-Boeing fleet with a new family of Airbus aircraft have "heavily impacted our financial positions", says Sabena. Belgium's traditional high labour costs and persisting structural problems have also taken a toll. Meanwhile, the airline still managed a near-10% rise in traffic, to 10.9 million passengers.
The likely outcome of the meeting is unclear since Belgium, which owns 50.5% of Sabena, and Swissair parent SAir, which owns 49.5%, apparently disagree on what to do next.
Having sold an initial stake to SAir in the mid-1990s, Belgium was to have ended its involvement in the generally loss-making Sabena. The next stage in that plan should have seen SAir take its stake to 85%, with the Belgian Government taking a 3.3% interest in SAir in return. Now, however, SAir - itself in financial dire straits - has proposed that Belgium share, on a 50/50 basis, the capital increase required to keep Sabena afloat. This is a situation that Brussels is trying to avoid.
Re-capitalisation could bring the airline into conflict with the European Commission, which no longer permits "government subsidy" for national airlines. Despite that, there is a feeling in Brussels that the financial package will get the green light.
While the manoeuvring over the re-capitalisation goes on, Sabena is trying to resolve its problems. A recovery plan known as Blue Sky has been set in motion to cut costs by BFr14.4 billion this year. Suspension of loss-making routes, increased tariffs and cuts to social costs are being pushed through.
Short-term gains are being sought by renegotiating contracts with City Bird for the lease of two MD-11s, and with Virgin Express, which operates on behalf of Sabena on routes from Brussels to London Heathrow, Barcelona and Rome.
Other companies are reported to have been approached with schemes to postpone payments in order to ease Sabena's plight.
Compounding SAir's own financial problems is mounting criticism over its European strategy, with delays in the re-organisation of its recently acquired interests in France's AOM, Air Liberté and Air Littoral into a single airline coming on top of the Sabena crisis.
Source: Flight International
