BUSINESS HERMAN DE WULF / BRUSSELS
Commission warns that no more aid or government-backed relaunch will be allowed following latest lifeline
Belgian national carrier Sabena was granted another lifeline on 17 October when the European Commission approved a €125 million ($114 million) bridging loan from the Belgian Government. Failure to award the loan would have resulted in the immediate bankruptcy of the national carrier.
The airline is continuing to fly under "concordat" or protection from its creditors until the end of November, while it has also been granted Chapter 11 bankruptcy protection in the USA to prevent aircraft from being grounded there.
EC transport commissioner Loyola de Palacio made it clear that approval of the loan is linked to conditions, however. The EC insists that the loan must be paid back and that this is the last time that the commission will allow the Belgian Government to bail out Sabena. The aid was only approved because it was set as a condition by the Brussels Court of Commerce for granting the concordat to allow Sabena to restructure, says the EC.
The EC made it clear that if Sabena is eventually declared bankrupt, no government money will be allowed in the launch of a new airline. This condition rules out a plan announced on Belgian television on 16 October in which five government-owned companies would provide €247 million in fresh capital for a new Sabena following the original's bankruptcy, while the government would invest another €247 million.
The government-owned companies comprise Belgium's national railroad company NMBS/SNCB, the national mail service, national telephone company Belgacom, Belgium's national air traffic control organisation Belgocontrol and Brussels International Airport.
Belgium's minister responsible for public companies, Rik Daems, has denied existence of the plan, however. Although it has been discussed, it is believed that the plan was deemed unrealistic, partly because the government realised the EC would reject it.
Sabena's restructuring plan is due before the Brussels Court of Commerce on 15 November following its presentation to the airline's board of directors and unions on 8 November. The plan is likely to be based around its Delta Air Transport regional subsidiary, with a sharply reduced workforce, fleet and route network.
Brussels-based low-fare airline Virgin Express expects to break even this year following a c3 million profit in the third quarter compared with a €37.5 million loss a year earlier. The improvement follows a drastic restructuring which included halving its fleet of Boeing 737s and staff, and dropping unprofitable routes. Load factors for the quarter reached a record high of 91.8%.Source: Flight International
