Belgian court grants Sabena creditor protection
A Belgian judge on Friday gave Sabena, the struggling national airline, an effective stay of execution, when she granted it protection from its creditors until 30 November, but expressed severe doubts about its ability to survive.
Anne Spiritus-Dassesse, said she was giving the state-controlled airline a “strictly limited time period to establish that its economic recovery could be possible.” During that time, the company does not have to service its E2.2bn ($2bn) debt.
The judge said the company had only E80m in cash – enough to maintain its activities for three or four weeks.
She added that its current business plan was “inconsistent, containing generalisations that in normal economic circumstances would be recovery measures worthy of interest, but which have yet to be shown as having any serious chance of success.”
She said the plan failed to take into account the events of September 11 or provide figures for the last month. Nor did it explain what sources of financing would replace Swissair.
This week, the failing Swiss airline, which owns a 49.5 per cent stake in Sabena, failed to deliver a promised E130m cash injection.
The Belgian government subsequently announced it would grant Sabena an emergency month-long loan of E125m, which was notified to the European Commission for approval.
The Belgian authorities have been in informal contact with the Commission about the loan for over a week, and it could be approved under guidelines for “rescue measures”, which can allow state loans for up to six months.
But Ryanair, the low cost carrier, has already lodged an objection with the Commission, arguing that the loan constitutes illegal state aid.
Ms Spiritus-Dassesse said that the Belgian authorities had given insufficient details about the terms of the loan, but that it was renewable and would not be disbursed until after the Commission gave its approval. She understood that the Commission would make its decision around October 17 – a date the Commission was unable to confirm.
“There’s no question of lending Sabena E125m every month,” Guy Verhofstadt, Belgian prime minister, said on Friday. “We need to force the issue.” He said the government was already in contact with potential investors.
Ms Spiritus-Dassesse said Sabena’s creditors would vote on a revised business plan on November 15, before the court’s November 30 decision on whether definitively to suspend Sabena’s debts.
Sabena could be plunged into bankruptcy by a European Commission refusal to authorise the government loan, rejection by its creditors or an adverse ruling by the court. But few, if any, of the parties concerned are eager to administer the coup de grace to Belgian’s national carrier.
Financial Times
