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Sabena to unveil survival plan

Sabena and the Swissair Group will grab the headlines again on Monday Keystone

The Belgian national carrier, Sabena, in which the Swissair Group has a 49.5 per cent stake, is to present its long-awaited business plan on Monday aimed at restoring the company's competitiveness.

This content was published on June 15, 2001 - 17:47

The company's chief executive, Christophe Müller, is to submit his proposals to the two main shareholders: the Swissair Group and the Belgian government.

A spokesman said the plan aims to return the company to profitability within the next few years.

Swissair and the Belgian government earlier this year agreed a capital injection of another SFr600 million ($340 million) to keep Sabena in the air.

Swissair, itself struggling to recover from losses of SFr2.9 billion last year, has not ruled out a complete withdrawal from Sabena, though analysts say this could be difficult to negotiate.

In the meantime, the Swiss company is seeking to re-negotiate an earlier agreement to raise its stake in Sabena to 85 per cent.

The new business plan to be unveiled on Monday follows a drastic restructuring plan agreed earlier this year between Sabena and Swissair, which was designed to cut costs.

Monday's plan will no doubt have repercussions for Swissair's share price, which has been hammered recently. Last week saw further falls in the share price after media reports said a withdrawal from the company's French airlines could be much more expensive than previously thought.

Pressure from the French government and unions may yet stop Swissair pushing AOM/Air Liberté towards bankruptcy. However, it is thought no buyer is likely to come forward to buy the troubled carriers.

More downward pressure on the shares came after a report from ABN/Amro that suggested the price could have a lot further to fall.

The currency markets will continue to digest the Swiss National Bank's decision to leave its interest rates on hold for the time being.

Most analysts had expected the Bank to cut rates by a quarter point last week but the bank's president, Jean-Pierre Roth, said little had changed in the Swiss economy since the last decrease in March.

The Swiss franc made some gains against the dollar and the euro after the announcement but they soon melted away. Analysts expect the dollar to continue testing the SFr1.80 mark this week, though many feel a dollar correction cannot be long in coming.

by Michael Hollingdale

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