Sabena Dealing with Financial Woes
BRUSSELS, Belgium (AP) _ Sabena Airlines president Christoph Muller on Thursday announced ``drastic and urgent ″ restructuring plans resulting in job cuts and reduced services as the company tries to come back to profitability.
``These drastic and urgent recovery measures are necessary to continue the development of the Sabena Group,″ Muller said in a statement.
Sabena said it expects to post an operating loss of 5.9 billion francs ($123 million) for this year and said the forecasts for 2001 didn’t look better.
As a result, Sabena said it will seek to cut between 400 and 500 jobs and end service on long-haul routes from Brussels to both Johannesburg, South Africa, and Newark, N.J. It said the two routes were running at heavy losses.
The airline, which is controlled by Switzerland’s SAir Group, parent company of Swissair, already has grounded several Airbus A340 aircraft to try to stem the losses.
Despite the poor financial situation at the Brussels-based airline, SAir Group announced earlier this year that it was increasing its stake in Sabena to 85 percent from its current 49.5 percent, subject to regulatory approval.
``In the last months, the financial situation of the Sabena Group has rapidly deteriorated due to both internal and external reasons,″ said Sabena.
The airline blames high fuel prices, the strong U.S. dollar and competition as well as rising labor costs and the high costs of renewing and updating its fleet.
Sabena posted a first-half operating loss of 2.4 billion francs ($50 million). It had a profit of 16 billion francs ($333 million) in the same period last year.