Herman de Wulf / Brussels and Simon Warburton / Paris
Ailing Belgian airline's future hangs in balance while lawsuits over compensation loom
The Belgian Government is preparing to launch a series of lawsuits against the Swissair Group if negotiations fail over Sabena's future. The threat follows the government's rejection, last week, of Swissair's bid to extricate itself from a deal to increase its stake in the Belgian flag-carrier from 49.5% to 85% by paying for a portion of a recovery plan.
The two shareholders are continuing talks to seek agreement on how to save Sabena from possible collapse. Government estimates are said to put the cost of saving the airline at €1billion ($850 million) and it is looking to the cash-strapped Swissair Group to provide around 50%. A Sabena recovery plan is on hold until new funding can be found.
While declining to confirm that it wants to back out of the deal, Mario Corti, chief executive of the Swissair Group, spelt out the problem. He says: "Sabena is running operating losses. We cannot continually pour in new capital only to have it spent."
Talking in the context of the Swissair Group's wider problems, Corti says: "We are going to organise an ordered withdrawal from all loss-making foreign airline participation. Our role is, unfortunately, not to finance the operating losses of companies of which we are a shareholder."
Belgian prime minister Guy Verhofstadt has already warned that the government would sue Swissair if a settlement is not found. Lawyers for the government believe that they could bring two cases against Swissair in addition to one for breach of contract were Swissair to refuse the further acquisition of shares.
Lawyers argue that Swissair seriously damaged Sabena in forcing it to acquire 37 Airbus aircraft in 1997. They allege that, in a desire for fleet commonality across the group, Swissair stepped outside the original terms of their contract and breached common law. The government also hopes to prove that Swissair has not met its obligation to ensure profitability of Sabena as part of its €350 million Blue Sky cost-cutting programme.
The unions, fearing the loss of up to 13,000 jobs across the airline and Brussels international airport, have called for further state intervention to support Sabena. Under European Commission rules, the Belgian Government can only bail out Sabena if it can find a commercial partner to match its offer.
Source: Flight International
