HERMAN DE WULF / ANTWERP
With no prospect of cash bail-out, the last hope for ailing Belgian flag carrier could be conversion to regional airline
Sabena's outlook worsened in late June when 49.5% shareholder Swissair Group said that it had no intention of investing further in the loss-making Belgian airline.
Swissair Group chief executive officer Mario Corti said that his airline had abandoned earlier plans to increase its interest in Sabena to 85% and wants to withdraw from it altogether. The Belgian Government, which owns 50.5%, was ready to supply Sabena with more money to implement a revised business plan provided that Swissair was also willing. Swissair Group argues, however, that the agreement to up its stake, which was ratified in January, was based on the condition of a return to profitability for Sabena.
Swissair is due to reveal its own action plan on 12 July, including the future of its Sabena involvement and other interests.
The Belgian Government is desperate to avoid bankruptcy of the national carrier and the loss of 10,000 jobs, but it cannot keep Sabena afloat alone. A unilateral cash injection is likely to be considered as a subsidy for the carrier and against European Union rules.
Swissair's announcement followed a request from Sabena management at its 18 June board meeting for another BFr16 billion ($340 million) from its shareholders to salvage the airline. Sabena managing director Christoph Müller, who has relinquished his Swissair Group responsibilities to concentrate on the Belgian flag carrier, says without the cash Sabena will run out of money next month.
Sabena's dire position prompted discussions in the Belgian Parliament and suggestions in the country that the airline could be forced to seek a concordat or postponement of payments - Belgian equivalent of US Chapter 11 bankruptcy protection - by July. Belgium's minister for government-owned companies, Rik Daems, and Sabena president Fred Chaffart were due to meet with the Court of Commerce in Brussels on 24 June to inform the court of developments.
Time is running out for Sabena, which received a BFr10 billion injection earlier this year - BFr4 billion from the government and BFr6 billion from Swissair.
Following the board meeting, Sabena president Fred Chaffart said: "A number of scenarios have been studied which led to the conclusion that extra money is needed soon, and that more cuts in costs will be necessary."
Options being considered are to: downsize Sabena to a regional carrier centered on its low cost Delta Air Transport (DAT) subsidiary; abandon long-haul routes with the exception of the profitable New York and Kinshasa, Democratic Republic of Congo, services; and increase code sharing. The airline has cancelled an order for 19 Airbus A320 family aircraft, which is likely to cost BFr6 billion in damages to the manufacturer.
Sabena suffered a BFr 13.3 billion loss last year, and indications are that this year's results will be just as bad.
Source: Flight International
