Sabena : 4 years later

[LX-LGX]

7th November 2001 : bankrupcty Sabena

VRT, Flemish television, will remember this during a short debate in "De Zevende Dag", broadcasted live on Sunday morning (11h00-13h00) and repeated later that evening (please check Teletekst or een.be).

The item on SN is scheduled for 12h27 (sorry, only available in Dutch):

Maandag is het precies vier jaar geleden dat onze nationale luchtvaarttrots Sabena crashte, met 12.500 werknemers aan boord. Accountingprofessor Ann Jorissen van de Universiteit Antwerpen heeft een grondige analyse gemaakt van de jaarrekeningen van Sabena en van Swissair, dat in 1995 de touwtjes bij Sabena in handen nam. Ze ontrafelde haarfijn hoe Swissair Sabena financieel heeft leeggemolken. Sabena-curator Christian Van Buggenhout benut die ontdekking nu om er deels zijn reusachtige schadeclaim mee te onderbouwen. In totaal eist hij van de voormalige SAirGroup ruim 2 miljard euro als "Wiedergutmachung'. Oud-Sabena-gezagvoerder Filip Van Rossem kijkt hier niet van op.

(a specialized university professor, the Sabena liquidator and former SN-pilot Filip Van Rossem will go into debate).

[blackhawk]

ow great , Van Rossem Maybe they can ask him how biep biep (BEAP) is doing before they start asking question concerning Sabena and SwissAir.

[Atlantis]

I hope that they will bring this till a good end and win this trial. It's off course too late, our national pride is gone. But my question is where will they get the money from: the Swiss government or the Swiss airline; but this airline work now very close with Lufthansa. Would that be an effect?

[Gate-A1]

it's the bankrupt company who will paid.

If the swissair (who the bankrupt is not yet closed) hasn't the money to pay the judge can decide to pursuit the shareholders and administrators. If there were real problem in the management, and no respect of the law of management (accounting, government policy, ...) of couse.

For swissair it was for exemple UBS and other bank, not sure that the swiss confederation was yet a shareholder in 2001

[Atlantis]

Mister Christian Van Buggenhout, curator, explained where they will ask the money, but it's not so simple.

I explain one thing. There were different daughter companies of Swissair who are becoming rich because they took a lot of the benefits of Sabena. Of course all those companies are in meantime also bankrupt but they have still a lot of activa, and that's the biggest part were the curator will took the money from. The amount is 1.900.000.000 euro.

They have started different trials for different reasons. It's really complex, a lot of companies, people and governments are involved.

[sukiyaki]

I wonder what Verhofstadt and Vande Lanotte got in return from the Swiss in the famous 'hotel agreement'. I can hardly imagine that it was just 'one way giving' towards the Swiss. I'm still an angry 'ex-Sabenien' and I wish to all my former collegues and Belgian citizens that we will know the complete truth some day. Congratulations to Mr Van Rossem for his clear view on the Sabena events !

[Zorba]

Indeed sukiyaki, I'm sure both Verhofstadt and Vande Lanotte got a nice thing for that agreement.

It was quite emotional for me to see the images again of the last flight and so on ...

[Atlantis]

For me too, I was very quite when I saw the images back. I have worked for Sabena some few years.

[tolipanebas]

I wonder what Verhofstadt and Vande Lanotte got in return from the Swiss in the famous 'hotel agreement'. I can hardly imagine that it was just 'one way giving' towards the Swiss. I'm still an angry 'ex-Sabenien' and I wish to all my former collegues and Belgian citizens that we will know the complete truth some day. Congratulations to Mr Van Rossem for his clear view on the Sabena events !

Well I am sure they didn't get anything personally from it I am quite convinced about the integrety of these 2 persons (not so much about their intelligence).


What was that Hotel agreement all about?

For over 5 years, SN and SR were set to merge into one single pan-European airline, with the Swiss controling the majority stake and an important minority share for the Belgians.

Because European law and bilateral agreements between Belgium and Switzerland did not allow such a mariage right away, SN and SR had to remain engaged for a long time, although meanwhile already living together, thus acting as if they were already married.

All decisions at SN during this period were made in the interest of this upcoming mariage (like the deal for 34 A320s...), but then all of a sudden SR didn't want SN anymore. Obviously this posed SN with some huge (financial) problems and Verhofstadt and Vandelanotte did what any lawyer would do in such a case: they negociated a contract in which the bride gets what you could call 'alimentation'. Not a life long fixed monthly allowance, but a single sum, large enough to honour all commitments and to bridge the time till a new partner could be found.

SR agreed to paying this sum, despite not being officially married to SN, on condition the Belgian government would relieve them from all possible future legal actions against them. The hotel agreement can thus be seen as a kind of DIVORCE contract. In itself it was not a bad idea, but the problem was that the sum SR agreed on paying was not going to be paid right away, but only months later, only shortly before SN needed the money. The Belgian government took the word of honour of SR CEO Mario Corti that this was only due to the time SR needed to free so much cash money and that it would arrive on time.....

The sum was due beginning of October, only a few days before SN had to make a large pay-off to several banks, but guess what? SR didn't honour its divorce commitment after all, yet filed for bankruptcy protection on the evening before the sum was due in Brussels, thus leaving SN no choice but to file for bankruptcy soon after because they literally ran out of cash money...

It is clear now SR simply used the hotel agreement just to buy crucial time to prepare for bankruptcy and to relaunch through LX and its CEO went as far as misusing his word of honour, not only at SN but also at AOM (which also expected a cash payment to settle its divorce from SR on the same day as SN).

The one and only - yet lethal- error with all this was that the Belgian Government believed they had the word of honour from the CEO of SAir on top of a rock-solid binding contract... It turned out to be just the word of a swindler (on the run for Belgian and Swiss justice now BTW) and the contract's worth was just the paper it had been printed on.

[n5528p]

The one and only - yet lethal- error with all this was that the Belgian Government believed they had the word of honour from the CEO of SAir on top of a rock-solid binding contract...

Please do not get me wrong, but considering the sums of money in this matter, I consider it somewhere close to neglect on behalf of the government.

I totally agree with your statement about certain people of SAir, still the Belgian side has had obligations towards its citizens and I do not understand why such an important thing is not casted in a " rock-solid binding contract".

Correct me if I am wrong, but obviously not all necessary precautions were take...

Regards, Bernhard

[cherdt]

Hi tolipanebas,

Thanks for clearing some things out about "the hotelakoord", but I still have one question. Before the "Hotelakoord", SN had a contract where was clearly stated that the suise would raise it stakes in SN whenever it was possible (EU regulations). Wasn't that a better agreement then "the hotelakoord"?

I mean why would they give that up?

For all those of you who are interested in this SN matter, download http://194.78.177.142/CMArticles/ShowAr ... ionID=1272 this is the paper written by Anne Jorissen (Guest in "de zevende dag" yesterday). It's about the acounting tricks the suise used to transfer money from SN to SR. It's very interesting and you don't have to be an accountant to understand it.

It's in english though.

[tolipanebas]

considering the sums of money in this matter, I consider it somewhere close to neglect on behalf of the Belgian government.

The neglect of the Belgian government for what was going on at Sabena did clearly show in the years before the hotel agreement, when all decisions at Sabena were taken by the Belgian majority shareholder on behalf of and in the sole interest of the Swiss minority shareholder without any questioning (because SN was set to to be taken over by SR anyway).

With the hotel agreement, the Belgian government finally acknowledged that the situation had changed dramatically and that SN was not going to be taken over by SR and would thus need attention (and money) from the government again. In fact by signing to the accord, they ironically ceased to neglect Sabena, yet made another mistake, namely naivety, by actually believing SR was going to honour its word till it was too late.

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I do not understand why such an important thing is not casted in a "rock-solid binding contract". 

Such a rock solid contract was signed; it was the very subject of the hotel agreement, but when one of the contracting parties files for bankruptcy the day before they have to meet their legal commitments, if has of course lost much of its importance.

You could compare it to a situation where some person owns you a lot of money so you get in contact with him to settle. He admits his guilt, agrees to pay you back in full and signs a contract in which you settle all disputes in return for the money. In that case you will have a rock solid contract and you are now legally guaranteed to get your money.... Except of course if something deadly happens to this guy between the signing of the contract and him actually paying you! Then you are no longer able to go to court and force the immediate application of your contract, but will have to wait very long till his heritage is finally settled... In fact, even then you don't have a real problem, you will get your money in the end, you will just have to wait for it. And that was the problem at SN, they could not wait as they pretty much needed the money right away.

The weakness of the hotel agreement was that the Belgian government agreed to a payment from the Swiss only days before Sabena's own deadline from several banks, rather than demand an almost immediate payment, although it can be argued that such a demand would not have made much chance of success, because SR didn't have the money ready at hands anyway. Besides if the CEO of Swissair gives his word of honour saying he will pay, it is not common practice not to believe him! (Try to see him as he was seen back then:.imagine the word of honour given by the chairman of LH for instance)

The naivety from the Belgian government starts to show for the first time when about a month before the date set in the hotel agreement, it becomes clear from different sources in the financial press SR is not going to pay Sabena (and the other airlines like AOM, Air Lib etc which all received a similar deal) , but is going to try saving itself by filing for bankruptcy protection. Rather than react to these increasingly strong rumours -and in the end even legal and financial clues- by starting to make up a serious plan B in case the money did not arrive from Switzerland in time, all the Belgian government did was to make a phone call to Zurich after wich Mr Daems (the Belgian minister responsible for SN) repeated once more he had a rock solid contract and the word of Mr Corti Swissair would pay!

Singing the hotel agreement itself was not such a bad dicission since it guaranteed SN the much needed cash money to survive in the post-SR times, yet the Belgian governement failed to draw up a plan in case SR would not pay as promissed, but rather naively hoped such plan would simply not be needed! The Belgian government thus had a very poor strategy; I guess that's what you see when a bunch of amateurs try do conclude big business deals. What makes it even more scandalous is that at the time of signing, Mr Corti already knew he was not going to honour the agreement, thus commiting a crime! When a bunch of amateur business men meet with a top swindler, then you don't have to be suprised to see them being stripped naked completely!

[tolipanebas]

Before the "Hotelakoord", SN had a contract where was clearly stated that the suisse would raise their stake in SN whenever it was possible (EU regulations). Wasn't that a better agreement then "the hotelakoord"?
I mean why would they give that up?

Swissair made it clear during summer 2001 they did not want to get married to SN anymore, no matter what!

There was indeed a binding contract between the shareholders of SN (the Belgian government and SR) which legally obliged SR to take over SN under specific conditions which were met in the mean time, but if SR did no longer want to do so, all the Belgian government could do was to go to court and start a very long legal battle to ask for financial compensation.

This of course would not have resolved the imminent financial problems for SN which were on the horizon....

Therefore, the Belgian government tried to settle with SR on a kind of mutually agreed divorce contract in which SR would pay a fair sum as financial compensation right away and in return be allowed to leave SN without further.

[regi]

I was very quiet listening at the sincere words of the people in the program. But was the Swissair illegal bookkeeping not just the last blow, after many years of institutionalised corruption, mismanagment, paternalism, political interference? Why was Sabena taken over to begin with...I still don't knwo why Sabena had to fly to Madras - or why they flew many years to Brasil with a 20% load. Don't bother to try to explain me, truth has come at last.

[n5528p]

@tolipanebas

I totaly agree with your above post. You exactly identified the the weak spots if this agreement. As you pointed out there were rumours before Swissair declared bankruptcy in the press - I guess there were even more rumours in the business which did not make it to the media... It was no secret that Swissair could file for bankruptcy. Since this possibility was known, why was there no safeguard taken? If the word of honour is enough, why a written agreement at all?

Besides if the CEO of Swissair gives his word of honour saying he will pay, it is not common practice not to believe him!

I have never ever heard of a business of this magnitude where someone trusted a word of honour.... This is more than naive...

Regards, Bernhard

[sn26567]

Swissair made it clear during summer 2001 they did not want to get married to SN anymore, no matter what!

That was, of course, after all the profitable parts of Sabena (most notably its cargo division and its lucrative routes) had been transferred to Swissair. Would a barebone Sanena still have survived after such a bad divorce?

[FlyA310]

I will never forget one swiss AMP manager based in BRU SN House who throwed his BIAC badge on his desk when leaving.
When doing this he said that the SR bankruptcy was mainly caused by SN's, Air Littoral's and AOM's bad management and that these companies had sucked SR's financial capacities to survive...
When I told him that the swiss imposed SN to participate in unreal projects (fleet expansion, customer care projects, crew management projects, etc) that needed a solid financial backbone (and which SN and other Qualiflyer partners had to co-fund without having the financial capabilities) he did not answer ... and walked away...

There was an evident difference in culture between the swiss and the Qualiflyer Group partners and the swiss culture was dictated by "SR's quality and commercial success" (before starting partnerships with other airlines). Moreover, they acted as being the "decision makers" in charge of "virtually everything" because they were the "investors" with the "knowledge" we did not had.

Anyway, they lost the game and as a consequence we lost our jobs and a very nice company called Sabena.

[regi]

Yes, Sabena went bakrupt, but SNBA still exists, and Swissair is now colonised by Lufthansa.

[Bruspotter]

Hello

Indeed , I didn't saw it on the TV again , but I can remember me very good , it WAS emotionally , feeling totally with all the victims to call them like that.

About what they are trying now in the trial...good that they would ever GET the money , if they can pay a big part to the former staff (everyone) and a bit to SN it would be a push in the back for both.

But I'm sorry for that but...I REALLY have serious doubts about wetter it will EFFECTIVELY GO LIKE THAT... ...I would guess if they ever would see 2 Billion old BEF (Belgian Francs) I would be already surprised...

But I really would like it as much as everyone hopes that they pay the WHOLE sum. But as mentioned LX with it's good recent contacts with LH etc...it might be that they can fight themselves out...?

Best regards: Yannick