$2b debt spells the end for Sabena

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HERMAN DE WULF / BRUSSELS & SIMON WARBURTON / PARIS

Airline's chairman blames Swissair and union action, as well as global crisis for sealing ailing Belgian carrier's fate

Belgian flag carrier Sabena finally accepted the inevitable and declared itself bankrupt on 7 November after 78 years in operation, leaving debts of €2.2 billion ($2 billion) and over 12,000 employees out of work. The bankruptcy is the largest in Belgium's history.

Chairman Fred Chaffart admits that Sabena's "continued lack of profitability" significantly contributed to the carrier's downfall - Sabena has been profitable only twice since 1958. Chaffart also blamed former 49.5% owner Swissair, saying: "Swissair's aggressive expansion policy, its sudden 2001 reversal followed by non-payment of a contractually agreed capital increase [60% of a total of €430 million], wild-cat strikes and the aviation industry crisis" all contributed to Sabena's demise.

Sabena's 86 aircraft are grounded at Brussels Zaventem Airport. The last service arrived on the morning of 7 November, after which several thousand Sabena staff, angry over the collapse and the fact Sabena could not afford severance pay, stormed government offices in Brussels. Protests continued at Brussels airport on 8 November, when Sabena staff blocked immigration gates, forcing flight disruption.

Unions and the government have now agreed that the Belgian treasury will cover the €385 million severance payments, as both Sabena and the industrial fund, which would normally cover the cost, have been overwhelmed by Belgium's largest ever redundancy. The total number of redundancies is still unknown, as up to 2,600 people may move to the successor airline, which will be based around Sabena's profitable regional subsidiary Delta Air Transport (DAT).

DAT and charter arm Sobelair continue to fly, but the future of Sabena Hotels, Atraxis Belgium and Sabena Technics is unclear.

The new DAT - dubbed DAT Plus but expected to take the name Air Belgium - was expected to assume some of Sabena's profitable European services as early as 9 November, followed by some long-haul services, including New York, Boston and Kinshasa.

Belgium's Prime Minister Guy Verhofstadt says that two Belgian bankers have secured the backing of 12 banks and investors to support the new company with a starting capital of €200 million. The European Commission, meanwhile, has approved the transfer to DAT of the €124 million bridging loan from the government originally destined for Sabena. The Belgian state will have no further stake in the new airline, with the new investors emphasising that the new airline will be free of government meddling.

Sabena has transferred landing rights and slots to its successor, initially headed by Christoph Müller, Sabena's managing director and the architect of DAT Plus. The new airline will employ around 2,600 staff, but with former Sabena subsidiaries the total number of jobs that can be saved is estimated at 6,000.