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Friday, 5 October, 2001, 14:21 GMT 15:21 UK

Sabena protected from creditors


Sabena
The EU may veto Belgium's offer of special assistance
Belgium's flag carrier Sabena has been granted protection from its creditors, though only if the government's offer of a short-term loan is deemed legal.

Sabena is on the verge of bankruptcy, victim of the near-collapse of its part-owner Swissair.

The Belgian government, which owns a controlling stake in Sabena, has offered to help, but it may not be allowed to do so.

"We don't know what the Belgian government is going to do is going to be allowable," said European Commission spokesman Gilles Gantelet.

Mario Monti, the EU's competition commissioner, warned again that governments should not use the attacks in the US as a pretext to bail out airlines that are already in difficulty.

"We should give limited state aid for airlines to meet circumstances like increased insurance premiums or higher safety requirements, but not use the situation to assist with public money airlines with problems before 11 September", Mr Monti said.

Relaunch

A court granted the airline bankruptcy protection on condition that the government gives Sabena a 125m euros ($114m, £77m) bridging loan to restructure.

The court order would give the airline two months to reinvent itself as a low cost airline.

However, European rivals of Sabena have criticised the subsidy.

And the EU competition watchdog has said it will investigate the bail-out.

Failed promise

Sabena's troubles have been going on for months.

But its difficulties only got truly serious this week.

Swissair, which holds a 49.5% stake in Sabena, failed to pay 132m euros as promised because it was overwhelmed by financial problems of its own.

The Belgian government, which holds the remaining 50.5% of the Sabena shares, has now sued Swissair for failing to help.

EU demands clarification

The European Commission has demanded to be immediately notified of the details of the planned aid package prepared by the Belgian government to bail out Sabena.

Sabena received a cash injection of 125m euros in the form of a bridging loan, but such subsidies could be in violation of EU competition rules.

Mr Gantelet said: "We still haven't received notification but we have made it known that we want this notification today [Friday]."

Air Lib

Another former Swissair subsidiary, the French regional carrier Air Lib, has also fallen victim to its parents' problems.

During the summer, Swissair managed to extricate itself from Air Liberte - as it was then known - with the promise of regular payments.

Now that Swissair has run out of cash, the money flow has stopped, leaving Air Lib at the mercy of its creditors.

Several Air Lib planes have already been impounded.

Swissair planes 'at risk'

Swissair's planes may be at risk of being impounded but planes belonging to Crossair should be fine, according to the man responsible for running the flight operations of both airlines under the restructuring.

Crossair president and chief exective Andre Dose told the BBC's World Business Report: "As far as Crossair is concerned it is completely separate...and Crossair is not concerned about the impounding of aircraft".

"Of course there is a risk that Swissair aircraft are impounded, I can't dispute that", he added.


Related to this story:
Air Lib planes seized in Paris (05 Oct 01 | Business) EU complains over Swissair aid (04 Oct 01 | Business) Swissair returns to the skies (04 Oct 01 | Europe) Sabena files for bankruptcy (03 Oct 01 | Business) Round-up: Aviation in crisis (04 Oct 01 | Business) Q&A: Bankruptcy made simple (05 Oct 01 | Business)


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