EU may probe Sabena aid

July 16, 2001 Posted: 1254 GMT

LONDON (CNN) -- The European Commission is considering opening a probe into a cash injection from the Belgian government for national airline Sabena.

Belgium's government and Swissair Group approved 250 million of aid for Sabena in January. Belgium, which owns just over 50 percent of Sabena, agreed to contribute 100 million.

But the Commission said on Monday it was considering opening a formal investigation because of concerns whether Swissair, which holds the remaining 49.50 percent of Sabena, would respect its commitment.

European Commission spokesman Gilles Gantelet said: "The Commission is currently thinking about opening a formal investigation on state aids in the case of Sabena."

He said the probe would seek to establish whether state aid should be granted. A decision by the Commission on whether to launch the investigation is expected on July 25.

The move comes after British Airways' (BAY) chief executive, Rod Eddington, wrote to the European Union's competition commissioner Mario Monti, saying Sabena should be allowed to collapse rather than receive state aid from Belgium.

The Sunday Times quoted sources close to BA as saying they were concerned Belgian government aid to the airline could "amount to state aid, breaking the spirit of the commission's rules".

The newspaper said Eddington had told Monti in a letter that aid for the airline "would unfairly affect competition in markets in which we compete with Sabena".

A row between the Belgian government and Swissair over who should keep the ailing flag carrier flying erupted after Swissair sought to buy itself out of its promise to plough cash into Sabena and raise its stake to 85 percent.

Swissair Group, Switzerland's loss-making airline, has fallen foul of a failed foreign expansion drive and is saddled with debt.

The company ejected its chief executive and chairman in January and has been seeking to reverse the Swiss carrier's expansion policy by building an airline around Swissair via the acquisition of stakes in regional carriers.

Belgium wants to force Swissair to give Sabena 530 million ($450 million) in a loan or credit line and has threatened to force it to pay more than 300 million in damages.

Share in Swissair were down more than 3 percent in afternoon trade in Zurich.

	Want the full story? Search for free company info...
	Enter Company Name:-