Sabena gets protection

October 5, 2001 Posted: 1127 GMT

LONDON (CNN) -- Belgium's struggling flag carrier Sabena won court protection from its creditors on Friday, giving it valuable time to restructure its business.

The carrier applied to the Brussels court for protection after its parent Swissair, which ran out of cash to keep its planes flying, broke a promise to inject some badly needed cash. Sabena has until November to put its house in order.

Sabena received 125 million from the Belgian government to keep flying, create a new airline and save as many of its 12,000 employees as possible. The government owns 50.5 percent of the airline, while Swissair owns the remainder.

The Swiss government on Wednesday gave Swissair enough money to operate until October 28. Swissair will then hand over about 70 percent of its airline operations to its low-cost carrier Crossair, which has been bought by Switzerland's two biggest banks.

European airlines, already suffering from slowing global economy, were hurt financially after the September 11 terror attacks, as travellers canceled plans to fly.

Many carriers have resorted to slashing jobs; Europe's biggest airline British Airways cut more than 7,000 posts, KLM Royal Dutch Airlines axed 2,500 and Swissair eliminated 4,250 jobs.

But the decision by the Belgian and Swiss governments to offer state aid to their airlines could fall foul of the European Commission, the executive arm of the European Union. The EC is opposed to governments offering any form of funding to any industry, as it breaches competition rules.

Irish low-cost airline Ryanair on Thursday made an official complaint to the European Commission, which has asked for details from governments. Ryanair and its rival Easyjet say that the airlines should cut costs and lower ticket prices to drive up passenger numbers.

To underline that point, Europe's second-biggest discount airline Easyjet said on Friday passenger numbers in September rose 27 percent.

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