Swissair crisis pushes Sabena into bankruptcy

Sabena could be headed down the same road as Swissair Keystone

The cash-strapped Belgian airline, Sabena, is to seek bankruptcy protection after Swissair -which owns 49.5 per cent of the carrier - failed to provide promised financial assistance. The Belgian government intends to sue Swissair to try and recover the money.

Belgium’s employment minister, Laurette Onkelinckx, said on Wednesday that Sabena was seeking bankruptcy protection from a commercial court so it could keep flying for the moment.

“It is a concordat or bankruptcy. There are no other choices,” he said. A concordat is the Belgian equivalent of Chapter 11 bankruptcy protection in the United States.

The move comes after Swissair failed to honour a commitment to pump €260 million (SFr387 million) into Sabena. The first tranche of the payment was due on Monday.

Belgium to sue Swissair

The Belgian government, which owns 50.5 per cent of Sabena, said on Tuesday that it intended to sue Swissair to try and recover the money. The cash was to be part of a €430 million re-structuring plan for Sabena, agreed in July between Swissair and Brussels.

The Belgian government is now expected to give Sabena temporary credit line so the airline can continue operations. The government is currently in discussions with European Union officials to determine whether the temporary credit complies with EU competition rules.

Sabena on Wednesday reassured passengers that, unlike Swissair’s, its planes would not be immediately grounded. “The financial means are there to guarantee normal activities,” Sabena chairman Fred Chaffart said.

He had strong words for Swissair for failing to honour its payment to Sabena. “Swissair hasn’t lived up to any of their commitments. We’ll hold them accountable for the situation we’re in,” he said.

Bankruptcy protection

Swissair filed for protection from creditors Monday and said its former affiliate, Crossair, a financially healthy regional airline, would take over two-thirds of its flights with the backing of two Swiss banks. The move gives Swissair time to reorganise without being carved up in a bankruptcy court.

Swissair grounded its entire fleet on Tuesday after it ran out of cash to pay for fuel and landing fees.

Also on Wednesday, a referendum among Sabena’s 12,000-strong workforce showed 57 percent backed the board’s restructuring plan, which calls for the shedding of some 2,000 jobs, eliminating unprofitable routes and selling non-aviation assets.

Sabena pilots on Tuesday suspended a four-day strike called to protest the re-structuring plan.

swissinfo with agencies