Sabena to present salvage plan to shareholders

Any plan to rescue Sabena will have implications for Swissair which holds a 49.5 per cent stake in the Belgian airline Keystone Archive

Belgium's loss-making national carrier, Sabena, is on Monday to present a long-awaited business plan to its shareholders, the Belgian government and Swissair Group. The plan will effectively decide whether Swissair hangs on to its stake in the carrier.

Sabena’s chief executive, Christoph Müller, is expected to outline how he intends to restore the airline to profitability. His plan will be closely scrutinised by the Belgian government, which holds a 50.1 per cent stake, and the Swissair Group, which holds the remaining 49.9 per cent.

Müller said in April that he expected Sabena to return to profit by 2003. However, analysts say this is unlikely, unless he massively scales back the airline’s operations.

They say Sabena’s days as a big international carrier are numbered, and it should surrender all ambitions to be a global flight carrier alongside British Airways, Lufthansa and Air France, and look instead at a drastic reduction in the scope of its routes flown.

One analyst told swissinfo that Sabena only had a future as a “satellite carrier within the context of a global alliance”.

There are signs that Sabena’s management are thinking along the same lines. An analyst at SG Securities, Ian Wild, noted that the Belgian airline had already scaled back its long-haul network.

Sabena also announced last May that it had suspended the delivery of 15 leased Airbus A320 aircraft while it reviewed its flight network under the new business plan.

As far as Sabena’s links with Swissair are concerned, Patrik Schwendimann from Zurich Cantonal Bank, said was likely that Swissair – which is itself struggling to recover from record losses – would, in the long run, decide to pull out of Sabena.

“Their goal is certainly to get rid of it – to go to zero per cent in the long run,” said Schwendimann. “All Swissair investors are hoping that Swissair Group would one day be without Sabena.”

Schwendimann said Swissair’s first goal would be to untangle itself from an agreement struck with the Belgian government last year to increase its stake in Sabena to 85 per cent.

“If they can stay at this level [49.9 per cent], I think they would agree to inject some more money into Sabena,” he said, adding that a profitable Sabena would allow Swissair Group to get a better price for its Sabena stake.

Trade unions now hold the key to deciding about the future of a streamlined Sabena, which currently has about 12,000 employees. A scaled back company would mean crucial cost savings from job losses and lower wages.

“It’s about accepting reality, really. Accept a smaller airline, or no airline at all,” Wild said.

“It’s clear there is no one that is willing to provide continued cash injections in order to allow the company to carry on losing money, which has been the case for the past ten years.”

swissinfo with agencies