Swissair faces uphill battle to get out of Sabena deal

Swissair is trying to wriggle out of its Sabena deal Keystone Archive

Swissair Group is seeking to re-negotiate its obligation to increase its stake in the loss-making Belgian airline, Sabena. The Swiss aviation company is struggling to cope with heavy losses of its own, and says it is no longer prepared to bail out Sabena.

Swissair owns 49.5 per cent of the Belgian carrier and has a contractual commitment to increase its stake to 85 per cent. However, it has made clear that it has no intention of honouring this agreement in the face of mounting losses at Sabena.

“We are in negotiations with the Belgian government to find a satisfactory solution,” said Swissair spokesman, Siro Barino.

“I must nevertheless emphasise the we will not support ongoing operating losses. They cannot expect our shareholders to accept these losses,” he added. “We will re-negotiate the option to go up to 85 per cent.”

But, the Belgian government, which owns the rest of Sabena, said it expects Swissair to meet the rest of its obligations.

“The Belgian state has always abided by its commitments [on Sabena] and will continue to do so in the future. We insist that the commitments made to Belgium should be fully respected,” said the public enterprise minister, Rik Daems.

Former Swissair chairman, Eric Honegger, signed the deal on January 25. It stipulates that Swissair boost its stake once a series of bilateral accords between the European Union and Switzerland takes effect.

Earlier this year, Swissair said it wanted to keep all its options open on its stake in Sabena. The troubled Swiss group, which lost SFr2.9 billion ($1.62billion) in 2000, has also abandoned an ambitious foreign expansion programme after its loss making affiliates drained its finances.

swissinfo with agencies