Sabena grounded as staff walk out

Sabena cabin crew grounded when other staff walked out. The graffiti reads: "Once Sabena, Always Sabena"

BRUSSELS, Belgium -- Flights of Belgian airline Sabena were suspended on Tuesday as staff walked out over fears of impending bankruptcy.

There was chaos at Brussels' Zaventem national airport as staff abandoned check-in desks, stranding hundreds of passengers.

The only known potential investor, British entrepreneur Richard Branson's Virgin Express airline, said the last-ditch recovery plan for the 78-year-old Belgian flag carrier was unworkable.

Airport officials advised travellers not to come to Zaventem, where travellers queued in vain at deserted check-in desks for flights that would never take off.

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"We call on Sabena passengers not to come to the airport. It won't do any good," Jan Van der Cruysse, spokesman for airport operator BIAC, said in a statement on TV and radio.

Employees in catering, cleaning, luggage and check-in started the wildcat actions as rumours grew that the company was closing, with scant hope that more than a fraction of the 12,000-strong staff would keep their jobs with any successor airline.

Amid heated scenes at the airport, Sabena -- which has debts of $2.1 billion -- was forced to cancel all but two flights in the afternoon though said they would resume later.

Arriving passengers faced long waits at baggage carousels as luggage handlers walked out.

"The last flights of Sabena," headlined the daily La Libre Belgique.

The Sabena board was meeting with an announcement expected during the evening but there was a news blackout.

Belgian Finance Minister Didier Reynders confirmed that the board could declare the airline bankrupt.

"It's possible we may have a declaration of bankruptcy from the board of Sabena tonight," Reynders told reporters after chairing a meeting of European Union finance ministers.

The government -- 50.5 percent owners of one of Europe's oldest carriers -- had been trying to work out a future with a viable Belgian-based carrier beyond the end of Sabena.

It sent extra police to the airport, wary of any attempt by disgruntled Sabena employees to sabotage operations or to seize planes.

The failure of Sabena -- nicknamed by mischievous travellers "Such A Bad Experience Never Again" -- would be a severe embarrassment to the Belgian government, which currently holds the rotating EU presidency.

At a spontaneous workers' rally in the main terminal, cleaner Maria Vindevoghel grabbed a megaphone and cried: "This is a fraudulent bankruptcy.

"It's the government's fault. They should take responsibility for the misery felt here today," she declared to fierce applause from dozens of colleagues.

Sabena passengers were advised against turning up for flights

"It's scandalous. No one knows what's going on," said Trui Weerts, 39, who said she had worked six years with Sabena at the check-in and reservations counters, according to Reuters.

Sabena and its co-parent Swissair, which owns 49.5 percent, were already in trouble before the September 11 hijacked jet attacks in the U.S. plunged the entire industry into crisis.

The unions met Belgian Prime Minister Guy Verhofstadt on Tuesday on how to compensate the majority of the 12,000 workforce likely to lose their jobs.

"We are working very hard to take care of the social aspects. That is the main goal of the government," said Privatisation Minister Rik Daems.

Finance Minister Didier Reynders had to leave a meeting of his European Union colleagues to attend the meeting.

Bankruptcy would open the way for new investors to come in and build a slimmed-down version of the airline -- with much fewer staff -- centred primarily on European flights.

The airline and Belgian government have planned to transfer part of Sabena's assets to Delta Air Transport (DAT), one of Sabena's subsidiaries which would survive bankruptcy.

DAT currently employs 1,000 staff. It flew 37 percent of Sabena's European flights and carried 3.3 million passengers last year.

Sabena began transferring take-off and landing slots to DAT last week, a move which would increase DAT's staffing to 2,600.

Sabena also cut destinations -- 10 of its total of 85 this week -- to limit the risk of aircraft being impounded outside Belgium.

However, any revamped airline to emerge would need new investors -- now hard to find after the September 11 terrorist attacks.

Virgin Express said on Tuesday it had been in talks with Sabena for months, yet it was unhappy with the plans for the creation of a successor airline.

"The plan would endanger the future of our personnel," said Virgin Express in a statement, but added that "talks are continuing."

On October 5, a Belgian court granted Sabena bankruptcy protection, giving management and the government until November 8 to come up with a rescue plan.

The filing followed the failure of co-owner Swissair, hit by its own cash crisis, to come through with a promised injection of $123 million in fresh capital.

Sabena was forced to seek the bankruptcy protection after reporting a loss of $122 million in the first half of 2001 -- $49.2 million more than the year before.

Over the past 25 years, the airline has lost more than $1.5 billion. It was known Sabena was fighting for survival with a board meeting and the publication of its business plan due this week.

Most analysts say that with $2.1 billion of debt which it is unable to service, the company had little option but to file for bankruptcy.

It would be the first European Union flagship airline to fail.

The European Commission had insisted that a one-month $113 million bridging loan the Belgian government gave Sabena in October must not be used for recapitalisation.

The EC said it was worried that a transfer of assets to DAT could amount to a hidden government subsidy.

"The rescue aid by its very nature is transitional aid," de Palacio said.

"The only thing it does is provide loans to enable the company to have the initial liquidity to overcome temporary difficulties with a view to submitting either a restructuring plan or a plan to wind up the company once and for all."

Winding up the company is what many rivals were hoping for.

Lufthansa, EasyJet and Ryanair were some of the groups critical of Sabena's aid, saying an unhealthy business should be allowed to fail.

Ryanair chief executive Michael O'Leary told CNN on Monday: "Commissioner de Palacio has done an outstanding job of finally telling these basket-case carriers in Europe, forget it, those days are over.

"Europe now belongs to those big carriers like BA, Lufthansa and Air France and the rapidly growing low fare carriers which are led by Ryanair."