Sabena vows joint legal action against Swissair Group

The Belgian government is taking a hard line over Swissair's involvement with Sabena Keystone

Sabena says it is ready to join the Belgian government in suing Swissair Group to make the company honour its commitment to buy a larger stake in the loss-making airline.

At a press conference in Brussels on Tuesday, the Belgian transport minister, Rik Daems, announced that Belgium will “take Swissair to court for breach of contract.”

On Tuesday, sources close to the Belgian government said it “had to react” to Swissair’s attempts to extricate itself from a commitment to increase its holding in Sabena to 85 per cent. Swissair currently owns 49.5 per of Sabena, with the Belgian government holding the rest.

Responding to the suggestion that the government intended to launch legal procedings against the beleagured Swissair Group, Sabena’s chairman, Fred Chaffart, said his airline would “take any necessary legal steps to save the company.”

Swissair spokesman, Patrick Jeandrain, told swissinfo that Swissair Group had not yet heard anything from the Belgian government regarding any planned legal action.

“I cannot see on what grounds the Belgians would intend to start legal action, but so far we have heard nothing,” explained Jeandrain.

According to the source, quoted by a French news agency, Brussels decided to start legal action against Swissair after rejecting the group’s so called “final offer” of fresh cash for Sabena.

Belgium described the cash offer, which was conditional on Swissair being allowed to back out of its commitment to increase its stake in the airline, as “totally unacceptable”.

Swissair’s chairman and chief executive, Mario Corti, said he was surprised at Belgium’s rejection of the cash offer. “It is with astonishment that I have received from the Belgian government… a summary rejection of the one proposal on the table which will ensure Sabena’s future without even discussing the matter with the parties concerned.”

He made clear that Swissair was not willing to finance loss-making airlines indefinitely and that “the future of Sabena now looks increasingly in doubt”, following Belgium’s rejection of the latest cash offer.

The offer put on the table on Monday by Swissair is a far cry from a total separation that some analysts had been expecting expected. The Swiss group only wants to reverse a commitment made by its previous management in January of this year.

Swissair agreed then to raise its stake to 85 per cent as soon as a series of bilateral agreements between Switzerland and the European Union come into force, which they are likely to do next year.

Swissair said its new offer called for it and the Belgian government, which has a 50.5 per cent stake, to provide jointly €275 million (SFr418 million) to Sabena. Swissair would also provide an extra €30 million subordinate loan to Sabena.

“The 305 million euros should allow Sabena to continue operating provided the Sabena management meets the operational objectives of their proposed business plan,” Swissair said.

It added that in return it would no longer be obliged to increase its stake and it would be discharged from any further financial engagements to Sabena or Belgium.

Swissair, which lost SFr2.9 billion last year, has pledged to sever all ties with loss-making foreign carriers unless the companies involved can be turned around quickly.

Sabena has only turned a profit once in several decades.

swissinfo with agencies