Sabena appears to once again be drinking at the last chance saloon as it draws up a plan to ensure its survival now that shareholder Swissair has washed its hands of any further liabilities

The carrier, which has only once made an annual net profit over the past decade, has unveiled its latest restructuring efforts designed not only to ensure the carrier's survival but to make it attractive to one of the global alliances. In early August president Christoph Mueller outlined the new business plan which sees a sweeping range of measures with the aim of it making a profit by 2005.

The moves include a 1,600 cut in the 10,000-strong workforce, a reduction in its fleet by nine aircraft to 72 and the dropping of eight routes - including its loss-making Tokyo and Washington services. A total of eight non-core subsidiaries will also be sold, including catering, maintenance, cargo, handling and charter airline Sobelair.

Sabena now has to stand on its own following the recently agreed €430 million injection from shareholders Swissair and the Belgian Government. "No further capital injection can be expected from the shareholders," said chairman Fred Chaffart.

"We have to realise that the future of Sabena rests now on our shoulders and that we have no choice than to adapt our organisation to new circumstances," said Mueller. "While, since 1995, Sabena has focused on entirely renewing and expanding its fleet, in the frame of the partnership with Swissair, this programme appears today unaffordable," said an airline statement. "The Brussels home market can hardly absorb on the short-term the large capacity increase resulting from fast fleet renewal."

Arealignment of Sabena's operations. particularly on the long-haul side, appears essential. While there is a natural demand for a reasonable short-haul network from Brussels, Sabena faces long-haul competition from stronger neighbouring hubs such as Amsterdam and Frankfurt. In addition, Air France has been siphoning passengers to Paris via the high-speed Brussels-Paris rail link.

The next step for Sabena is to convince its unions and employees that it has the right strategy and there has been a series of meetings between the two sides. However, the climate is a nervous one. Unofficial strikes prior to the new business plan being revealed show how tough it will be to reach agreement.

Source: Airline Business