Sabena Airlines
SABENA BELGIAN WORLD AIRLINES
The company
Sabena was the Belgian air carrier and one of the oldest in the world.
It played it most crucial role in the development of Belgium’s colonial ties to Africa >> The airline was an important component of Belgium’s national sovereignty.
The dependence on African routes resulted in long run problems after the colonies achieved independence >> Even losing money, the Belgium government continued to support it due to historical and employment importance.
Sabena functioned more like a public authority staffed by civil servants than a competitive airline >> Inefficiency, low quality and political issues.
Rigid compensation rules (no incentives to increase in productivity or performance), powerful unions, lack of competence at the supervisory level, poor communication between management and workers.
Access to Zaventem Airport was a valuable asset >> strategic location near the center of Western Europe >> ideal hub location. The company wasn’t in a good situation in 1990 >> Unfavorable conditions of the global airline industry and lack of leadership due to the former CEO coma.
Increasing debt and decreasing equity >> company was near bankruptcy.
Context
Airline operations were based on high fixed costs.
The unification of Europe could lead to a rise in predatory practices n the part of dominant carriers (free borders and reduced regulatory environment) and to industry consolidation (US example).
Governments were no longer willing or able to prop up unprofitable operations.
Creation of alliances between airlines.
The capacity of European airports would be seriously restricted between 1995 and 2000 and governments didn’t have the money to invest.
Persian Gulf Crisis led to an increase in oil prices and to decrease in passenger travel due to concern about unstable conditions.
The predominant strategy in the airline industry was to focus on low cost.
November 1990 - The Belgian government announced that Pierre
The company
Sabena was the Belgian air carrier and one of the oldest in the world.
It played it most crucial role in the development of Belgium’s colonial ties to Africa >> The airline was an important component of Belgium’s national sovereignty.
The dependence on African routes resulted in long run problems after the colonies achieved independence >> Even losing money, the Belgium government continued to support it due to historical and employment importance.
Sabena functioned more like a public authority staffed by civil servants than a competitive airline >> Inefficiency, low quality and political issues.
Rigid compensation rules (no incentives to increase in productivity or performance), powerful unions, lack of competence at the supervisory level, poor communication between management and workers.
Access to Zaventem Airport was a valuable asset >> strategic location near the center of Western Europe >> ideal hub location. The company wasn’t in a good situation in 1990 >> Unfavorable conditions of the global airline industry and lack of leadership due to the former CEO coma.
Increasing debt and decreasing equity >> company was near bankruptcy.
Context
Airline operations were based on high fixed costs.
The unification of Europe could lead to a rise in predatory practices n the part of dominant carriers (free borders and reduced regulatory environment) and to industry consolidation (US example).
Governments were no longer willing or able to prop up unprofitable operations.
Creation of alliances between airlines.
The capacity of European airports would be seriously restricted between 1995 and 2000 and governments didn’t have the money to invest.
Persian Gulf Crisis led to an increase in oil prices and to decrease in passenger travel due to concern about unstable conditions.
The predominant strategy in the airline industry was to focus on low cost.
November 1990 - The Belgian government announced that Pierre