Sabena's fate is uncertain

More uncertainty on Wednesday surrounded the fate of Sabena, Belgium’s troubled flagship airline, as the government tried to play down news reports that a move to file for bankruptcy could soon be made.

Since Sabena is under Chapter 11 style protection from its creditors, such an initiative could come from one of several parties.

The government, which owns 50.5 per cent in the lossmaking airline, indicated it was not considering a bankruptcy filing in the next few days.

Sabena officials said they were still engaged in a rescue plan for the airline, focusing on its smaller regional subsidiary DAT, which would involve attracting a new investor.

However, the Belgian commercial court that extended creditor protection to Sabena until November 30 has also appointed three commissioners to oversee the operations of the company.

If they conclude that it has no financial future – if for example the search for new investors is doomed, Anne Spiritus-Dassesse, the judge, can declare the company bankrupt.

Worryingly for the Belgian government, the European Commission is maintaining its tough line on new state aid for airlines, in spite of allowing a E125m ($112m) emergency loan to keep Sabena flying this month.

In any case, time is running out according to the strict timetable laid out by Ms Spiritus-Dassesse.

The company’s creditors, who account for Sabena’s E2.2bn of debts, are scheduled to vote on November 15 on management’s proposals to rescue the company.

Such proposals will need to deal with the new investment without which the cash-strapped company has no chance of survival.

But since the creditors would need to receive the management’s plans several days before the vote, Sabena has little more than a week left to fight for its survival.

So far only Virgin Express, Sir Richard Branson’s Brussels-domiciled carrier has formally registered “interest in acquiring certain assets of the company and its operations”.

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