SWISSAIR is in an advanced stage of talks about taking a dominant stake in the troubled Belgian carrier, Sabena. But the share will have to remain below 50 per cent, if the alliance is not to lose its main purpose for the Swiss - opening a back-do or into the European Union airline market.
The link-up will be the first sizeable one between European carriers, which hitherto have focused on equity swaps and code- sharing arrangements with American companies.
Both airlines are small - Swissair's market share among European carriers is around 5.6 per cent, while Sabena's is just 2 per cent - and urgently need to increase their size in the face of rapidly intensifying competition within Europe.
Swissair is expected to pay around pounds 145m for a stake a little short of 50 per cent of Sabena, the reasonable price reflecting the parlous state of the Belgian carrier's balance sheet. Swissair refused yesterday to discuss either the price or the size of the share it is seeking.
Air France holds a 25 per cent stake in Sabena - the remainder is owned by the Belgian government - but has already intimated it is ready to pull back from an engagement that has brought few benefits.
Swissair's long-term vision is to be the powerful European link in a global airline partnership that includes Delta Airlines of the United States - with which Sabena also has a co-operation arrangement - and Singapore Airlines.
But Swissair's ambitions are handicapped by its inability to offer its international partners a strong enough platform in Europe, because its base country is not a member of the European Union, Paul Maximilian Muller, the …