Belgium issues Swissair with ultimatum over Sabena
The Belgian government has warned Swissair that it must decide by next Tuesday whether to inject more funds into Sabena or the troubled Belgian flag carrier could face bankruptcy.
Earlier this week Mario Corti, chief executive of Swissair, said that he would not honour the commitment made by the previous management to increase Swissair’s stake in Sabena from 49.5 per cent to 85 per cent. At present, the Belgium state holds the majority stake in Sabena.
Mr Corti also said he is not prepared to fund Sabena’s ongoing operational losses, making it unlikely that he would be prepared to take part in any further capital injection.
Swissair’s shares shares fell below the SFr100 barrier yesterday for the first time since January 1993, closing SFr6.50 lower at SFr95.50, amid continued uncertainty about the Swiss company’s relationship with Sabena and doubts about the effectiveness of its exit strategy from AOM and Air Liberte in France.
The shares have fallen more than 60 per cent since the start of the year when chief executive Philippe Bruggisser was ousted because of his disastrous strategy of investing in loss-making airlines around Europe.
There are fears that Swissair could be dragged into bankruptcy itself if it does not end its exposure to these loss-making investments. Swissair has promised to clarify its strategy further on July 12.
In January, Swissair recapitalised Sabena with E150m ($128m), while the Belgian government pumped in a further E100m as part of an initial restructuring. But the European Commission has made it clear that under state aid rules the Belgian government would not be able to put any more money in Sabena without an accompanying contribution from a private sector partner.
“I have reminded Swissair of the contracts they have made with the Belgian government loud and clear,” Rik Daems, Belgium’s privatisation minister, said in parliament on Thursday.
Sabena has already delayed presenting a new business plan because it could not get agreement from Swissair over its funding needs, thought to run into hundreds of millions of euros. Sabena’s board of directors will next meet to discuss the business plan next Tuesday, by which time the Belgian government wants a definitive answer on Swissair’s investment plans.
On Monday, Sabena’s management will make a fourth appearance before a Belgian commercial judge who has chosen to monitor it as a potentially stricken company, a process allowed under Belgian law, and has the power to put it in protective receivership.
“We have to give an update on the financial situation and on the business plan,” Sabena said on Thursday. “Up to now this has been a completely normal procedure.”
Pressure is also mounting on Swissair in France where its bankrupt French airline operations are close to running out of cash as would-be bidders continue to circle the struggling airlines.
The cash crisis makes a decision by a French judge earlier this week to grant the operations protection from its creditors for three months superfluous.
Financial Times
