Ryanair moaning again! [Archive]

The Guvnor

5th Oct 2001, 11:05

From today's ATW Online. If the EU decides that the credit from the Belgian government does constitute state air, the Belgians will be required to withdraw it and it will be all over for Sabena. Given the circumstances, it is highly probable that this may well be the case.

Sabena remains on a "cash only" basis with most suppliers and few bookings are being made.

EC investigating Sabena aid
Dateline: Friday October 05, 2001

European Commission asked the Belgian government for information on the €125 million ($115 million) bridge loan it granted Sabena and for details on the airline's restructuring plan so it could come to a decision "as soon as possible" on whether the loan could qualify as "rescue aid."

The EC added that it did not believe the situations of Sabena or of Swissair to be linked directly to the problems experienced by the airline sector after the terrorist attacks on the US. An ad hoc working group is to present a paper to the EC next Wednesday on the economic effects of the attacks on the airline industry.

The Belgian government said that while it was a "very difficult exercise," it remained hopeful the EC would approve the loan under special rules for the rescue and restructuring of companies in difficulties.

In a statement, Sabena said that its activities continue normally, adding that on
Wednesday, "besides misunderstandings in six UK airports, where flights had to be delayed or even cancelled in order to explain Sabena's situation, no other incidents affected the flight schedule."

and from The Scotsman:

Ryanair urges EC to block Belgian aid package
Belgium insists €25m complies with rules

RYANAIR has lodged an official complaint with the European Commission, protesting against the Belgian government’s aid package for airline Sabena and insisting the European body acts to halt the deal.

The Belgian government’s €25 million (£16 million) bridge-finance package is a lifeline for the troubled carrier, which was set to go to the wall following the 11 September atrocities.

The deal is a temporary measure, designed to keep Sabena flying for one more month until new investors can be found.

But Ryanair’s chief executive, Michael O’Leary, branded the package as state aid and as "unfair", adding: "I’m very confident the commission is going to block this."

Rival budget carriers easyJet and Go pledged full support. EasyJet said: "We are 100 per cent behind Ryanair."

"Had it not been for the attacks, Sabena would not have received this aid. It had long-standing problems and would have gone bankrupt anyway."

The EC placed a ban on state aid for airlines earlier this year in an attempt to consolidate the industry.

It has placed strict regulations on any state hand-outs and requires government money to be backed up with private finance.

Although the Belgian government is Sabena’s majority shareholder, Swissair - which filed for protection on Monday - owns the remaining 49.5 per cent. The troubled Swiss carrier reneged on £35 million it was due to pay Sabena - its share in the airline’s refinancing deal.

The Belgian government has been left to shoulder all the responsibility, and has threatened SwissAir with legal action over the disputed payments.

A spokesman for Sabena confirmed that the loan was direct government aid, but Belgian finance minister, Didier Reynders, insisted it was an emergency aid package which complied with regulations.

The EC is awaiting full details of the plan before it passes judgement, but added that any deal must prove that it is concerned only with those problems caused by the 11 September attacks.

Reynders, currently chairman of European Union finance ministers, said that rules barring EU countries from subsidising their airlines must be put up for debate, given the US$15 billion aid package raised for US carriers.

But yesterday the EC confirmed its anti-aid for airlines stance, when it said it would complain to Switzerland - a non-EU member - for not forewarning it of its decision to grant emergency financing to Swissair.

The EC said that the aid package contravened EU-Swiss agreements covering transport, reached in 1999. But Swiss officials insisted that the money was simply a loan and therefore could not be defined as state aid.

Sabena has recorded a profit just twice in its 88-year history. This year alone it has received €680 million (£420 million) in fresh capital - at least 40 per cent of which came from the Belgian government.

The EC placed a ban on state aid for airlines following these moves and scheduled a full-scale investigation into the transactions.

Iain Dey
Friday, 5th October 2001
The Scotsman

[ 05 October 2001: Message edited by: The Guvnor ]