TIME TRACKS SABENAS FREEFALL FROM GRACE TIME outlines how winging it couldnt keep the Belgian airline in the air

LONDON 21.11.2002 (PROTEXT): In this weeks issue (onnewstands today) TIME looks at the reasons why Sabena took theplunge from darling of Belgian business to controversialcasualty of recent airline downturn, and finds that the descentmay have started long before September 11.

In late 1997, Sabena put in an order for 34 new Airbusplanes, at a price of around $1 billion. Was this the act of athriving business with a sound expansion strategy or just thelatest of many bizarre decisions that simply didnt add up, by abusiness with a less than salubrious history?

At best, unconventional reasoning was involved the deal wasworth five times the companys entire capital. But after talkingto ex-employees, managers and members of the investigatingCommission of Inquiry, TIME uncovers enough evidence to suggestthat Sabenas actions may even be worthy of chilling comparisonwith Enron.

Raymond Legendries, president of the commission whosefindings are due at the end of the year, calls it An astonishingepisode, and reveals that There were bizarre goings-oneverywhere at Sabena, and not just with the Airbus.

These include a life-saving alliance with Swissair, a companywhich, in the words of another commission member, was seen as aflying bank. Although under the pilotage of former Swissairmarketing chief Paul Reutlinger results did indeed improve andSabena saw its first profits in more than a decade, in realitythese results were a fluke.

As subsequent CEO Christoph Müller puts it, You didnt need tobe a rocket scientist to know Sabena was in serious trouble. Youjust needed to read the balance sheet. Cutbacks were proposed,and Sabena went into a tailspin.

Swissair reneged on its deal to increase its stake, theBelgians sued, unions staged work stoppages and a secreteleventh-hour deal was struck by the Belgian PM without theknowledge of those responsible for running the company. And thenon September 11 the world changed.

The international editions of TIME magazine are publishedspecifically for readers outside of the United States. There arefour regional publications covering Europe, the Middle East andAfrica; Asia; the South Pacific and Canada. Each edition offersreaders access to Time Inc.'s global resources with regional,relevant stories. TIME is Europe's leading weekly newsmagazine,with a circulation of 600,090 across EMEA and 315,000 in Asia.Founded in 1923, TIMEs worldwide circulation is more than 5.6million. -ends- For further information please contact: Emma Gilpin International Director of Public Affairs Time & Fortune Group

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Email: emma_gilpin@timeinc.com

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