Belgium to sue Swissair for reneging on Sabena payments

Swissair owes Sabena €260 million Keystone Archive

The Belgian government says it intends to go to court to force Swissair to honour a commitment to pump €260 million into the Belgian carrier, Sabena, which is on the verge of bankruptcy. Swissair failed to make an initial payment on Monday, after being placed in receivership.

Belgium’s privatisation minister, Rik Daems, confirmed on Tuesday that Sabena would seek to take Swissair to court. His comments came after the Swiss airline canceled flights to Belgium, saying it feared its planes would be seized.

Swissair was on Monday due to pay Sabena €120 million ($110 million) as part of a €430 million re-structuring plan, agreed in July between Sabena and its two shareholders – Swissair and the Belgian government. Under the agreement, Swissair was to meet 60 per cent of the restructuring costs.

A Sabena spokesman, Wilfried Remans, refused to say how Sabena plans to recover the funds from Swissair.

But he told swissinfo that Belgium had no plans to impound Swissair planes, adding “we don’t understand, therefore, why Swissair has cancelled its flights to Brussels”.

A Belgian government spokeswoman, Régine van Tomme, said legal action could be brought against the Swiss banks – UBS and Credit Suisse – which helped to broker a salvage plan for Swissair.

That plan has placed the airline in receivership, and transferred two-thirds of its most profitable routes to its regional sister airline, Crossair, which is now a separate company, largely owned by the two banks.

“We’re examining all legal options,” said van Tomme. “They could be directed against Swissair, Crossair, and possibly the two banks, too.”

Sabena has been servicing Swissair’s seven daily pairs of flights between Zurich and Brussels since early morning on Tuesday.

Bankruptcy law

An expert in Swiss bankruptcy law, Thomas Gattlen, told swissinfo that to recover funds owed to it by Swissair, Sabena can file a claim in Zurich. “Swiss bankruptcy law acknowledges demands by international creditors,” he said.

He added that the Belgium government also has the option of putting Swissair assets held in Belgium into receivership without breaching international agreements.

“Having its assets stripped by a variety of foreign bankruptcy courts evidently is what the new Swissair management fear most,” Gattlen said.

The planned Belgian civil suit against Swissair would charge the airline with failing to live up to its responsibilities as a shareholder. Brussels had already threatened to file suit last March, but backtracked in July in exchange for Swissair’s financial commitments in the re-structuring of Sabena.

Bilateral relations

The Swiss government has said it doesn’t expect the Swissair debacle to have any bearing on Switzerland’s bilateral agreements with the European Union.

“We have no indication that the Belgium government has changed its position,” a speaker for the government’s integration office, Thomas Schwendimann, told swissinfo. He was referring to a Swiss-EU bilateral treaty which Brussels has yet to ratify.

Belgium is one of three countries still to give the go-ahead for the treaty, which was concluded in 1999 between Switzerland and the EU. The agreement stipulates that Swiss airlines should enjoy the same rights as their EU counterparts within Europe.

Pilots abandon strike

Meanwhile, Sabena pilots have suspended a four-day strike called to protest a restructuring plan that would cut more than 10 per cent of staff, sell off assets and reduce the fleet to try to make the airline profitable by 2005.

“This delay of 24 hours is to allow the board of directors and its political partners to fundamentally revise the business plan which would be disastrous for Sabena,” said a pilots’ association statement.

The Belgian government has repeatedly warned that the airline is set to run out of cash within weeks and, like Swissair, its situation has been exacerbated by the attacks in the United States.

by Markus Haefliger