This is the press release of the Sabena Group concerning Sabena's recovery plan, announced today by Cristoph Müller, CEO of Sabena.
Brussels, October 19th, 2000
To face a worrying financial situation
Sabena announces ambitious recovery plan
On Thursday October 19, 2000, Sabena Group President & CEO, Christoph Müller, presented to the personnel the recovery measures aimed at making Sabena profitable. Target for 2001 is to increase the results of the Group by 14.4 billion BEF (357 million EUR), divided in management measures worth 12.2 billion BEF (305 million EUR) and social measures worth 2.2 billion BEF (52 million EUR).
In the last months the financial situation of the Sabena Group has rapidly deteriorated due to both internal and external reasons. The increase of the fuel price, the high rate of the dollar, the strong competition and the change of American partner are the main external causes. Internal causes are the costs of the fleet renewal, the sharply grown activities that have not been followed by a proportional decrease of fixed costs, and the increase of the social costs.
Without drastic measures the financial situation threatens to worsen rapidly, especially as fuel costs and the dollar rate will not fundamentally change in 2001.
‘Urgent measures are necessary to enhance the profitability of the Sabena Group and avoid endangering the cash position’, declared Christoph Müller. ‘We have therefore started the Blue Sky and Clean Slate projects which allow us to measure the necessary efforts for the coming months.’
The management measures (improvements worth 12.2 billion BEF) concern all departments and legal entities of the Group. Most important measures are related to a reduction of the long haul capacity starting April 2001. Direct flights from Brussels to Johannesburg (South Africa) and to Newark (United States) will be suspended. These flights have become heavily loss making, due to strong competition and the devaluation of the South African Rand. The management of the Group considers it as a priority to give the grounded aircraft, as well as the already in June grounded 2 Airbus A340 aircraft, a new destination. The renewal of the Sabena medium haul fleet around the Airbus A320 family will be continued.
In view of the future 85% majority shareholding by the SAirGroup the harmonisation of the operational entities of the Sabena Group and the SAirGroup will be accelerated. This will mainly concern Catering, Cargo Handling, the Facilities&Properties department and Sabena Technics SA.
Contracts and processes to obtain goods and services will be thoroughly examined, especially in Sabena Technics. Also the management of Brussels as a hub will be improved to reduce costs caused by irregularities and delays.
Finally, all assets which in the end don’t contribute to the profitability of the Group will be sold.
The social measures (improvements worth 2.2 billion BEF) will be negotiated with the personnel representatives. Target date is to have an agreement on Group level by the end of November, and on the level of operational and legal entities by the end of January. The social measures are primarily related to organisation of work, polyvalence, re-engineering and outsourcing. Objective is to accelerate productivity improvements.
Due to the reduction of capacity (see above) and other recovery measures, there will be a surplus of personnel on Group level of about 400 to 500 personnel (FTE’s or full time equivalents). A collective dismissal is not foreseen: no effort will be spared to reorient this surplus of personnel within the Sabena Group, in view of the growth of its activities. Several operational entities (Sabena Technics, Atraxis, the call centre, etc.) are still looking for qualified personnel to secure the growth.