Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Virgin Express (VIRGY) Richard Branson's European Airline -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (56)	11/9/2001 2:01:53 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 62

Plan for new airline post-Sabena faces doubts November 08, 2001 04:43:00 AM ET By Katie Nguyen BRUSSELS, Nov 8 (Reuters) - Belgium faced uncertainty on Thursday over attempts to develop a viable new private airline from the wreckage of bankrupt flag carrier Sabena [SAB.UL]. The government reached an agreement overnight with trade unionists on compensation for more than half of Sabena's 12,000 workers who are certain to lose their jobs. But questions emerged as to whether the European Commission would approve the transfer of a government bridging loan from Sabena to the new airline, which is expected to take over part of the defunct carrier's operations and be based on Sabena's regional airline subsidiary Delta Air Transport (DAT). In a bid to smooth the transition, Sabena transferred its 1,000 take-off and landing slots at Brussels national airport to DAT on Tuesday, shortly before it became Europe's first national airline to file for liquidation. While Belgium sought to sidestep EU rules outlawing further state aid to airlines by finding private capital for the new airline, some analysts doubted whether 155 million euros to be raised from a consortium of 12 investors would be sufficient, even if all participate. In addition, it was unclear whether the EU executive would authorise an additional 45 million euros from three regional investment funds which is effectively public money. Four big banking groups -- KBC , Fortis , Dexia and ING Barings' BBL affiliate -- confirmed they were willing to invest in the new airline. They declined comment on the exact amounts. Other non-financial companies confirmed they had been approached by said they had not yet decided whether to join. VETERANS TO THE RESCUE As part of its bid to save Belgian pride with a new airline, the government drafted in two veteran captains of business -- former EU Industry Commissioner Etienne Davignon and Fortis co-chairman Maurice Lippens -- to woo potential investors. Davignon, who had also been enlisted by Belgium to find foreign investors for its former colony, the Democratic Republic of Congo, said bankruptcy was the best way to preserve Sabena in some form. "If we had to create this new Sabena out of the existing Sabena, there would be no business plan," he told RTBF radio. He said the consortium would look for an airline partner to run the new company, and its first preference would be British entrepreneur Richard Branson's Virgin Express . In Washington, Branson told reporters on Wednesday he did not rule out of the possibility of seeking a stake in the new DAT. "It is an option. We'll see what happens," he said, adding that if the government had raised enough private capital to create a new airline, "I suspect...Virgin Express and DAT will have some talks about whether we will compete or work together". Sabena only posted a profit once since 1958, and owes banks some $2.1 billion. It and co-shareholder Swissair , holding a 49.5 percent stake, had been in trouble well before the September 11 hijacker attacks dealt a body blow to the global airlines industry. The Belgian government, which oversaw Sabena spiral into liquidation, tried to sound upbeat about the as yet unnamed new company, although it was clearly far from a done deal. Public Enterprises Minister Rik Daems, in charge of the Sabena portfolio, said he hoped the new airline would be flying in the next few days in Europe, Africa and two U.S. cities, subject to permission from a court-appointed trustee. While the government insisted it would not hold a stake in the new airline, EU officials said they would take a hard look at the rescue, involving the transfer to DAT of the emergency 125 million euro briging loan the government made to Sabena. The EU has repeatedly warned this money must be used to pay wages and other running costs and not be a disguised bailout. The Commission's decision is likely to set a precedent, with expectations that Sabena's demise will not be the last to befall an EU flag carrier. © 2001 Reuters news.moneycentral.msn.com