Cash injections appear to be paying off

Date: 10/07/1997

FIVE airlines have gone cap in hand to the European Commission before Alitalia and, for the most part, now appear to have turned the corner towards profitability.

Belgian carrier Sabena kicked off the process with a demand for a 400-million-ecu debt write-off and a two-stage increase totalling 475 million ecu.

Sabena has been through turbulent times since then, dropping its first partner Air France for Swissair. The last full year results, for 1996, showed a shortfall of 250,000 ecu, but the company is predicting a return to profit in 1998 after a slight loss this year.

Aer Lingus made a more modest bid for 233 million ecu, which was paid out between 1993 and 1995 on condition that it delivered savings of 66 million ecu. It has now entered its third year of profit, with its 1996 net profit rising to 42 million ecu from 20 million ecu a year earlier.

Europe's third biggest airline, Air France, was cleared to inject 3 billion ecu in 1994, with payments spread over three years and conditions attached that the airline should fulfil a restructuring plan and not use the cash to cut fares. It posted its first net profits of 61 million ecu for 1996-1997, the first since the plan took effect.

TAP Air Portugal was cleared to receive 900 million ecu in 1994, with the by now usual conditions attached.

Iberia was a much more fraught case for Transport Commissioner Kinnock in 1996, with seemingly endless haggling between Brussels and Madrid before he approved 545 million ecu after an exhaustive scrutiny of whether a 'market investor' would have made the same decision.

Iberia had already received 750 million ecu almost three years earlier and Kinnock was, predictably, lambasted for the second clearance by the British and German press.

Olympic has had the second of three aid payments frozen by Brussels after Athens gave extra cash to the company with Commission clearance, but failed to adhere to earlier promises. The second slice was worth 76 million ecu, from an initial injection worth a total of 1.8 billion ecu.