Sabena tells EC of Air France deal

SABENA, the Belgian national carrier, has notified the European Commission of its proposed merger with Air France after months of soul-searching.

The Commission now has a month in which to report on the competition implications of an eventual merger, which involves the French airline taking a 37.5 per cent stake. During that time, the Commission can make suggestions to resolve any potential problems, such as route-sharing.

Analysts have suggested that a Sabena-Air France partnership could fall foul of competition requirements through Air France's relationship with UTA, in that it would dominate European routes to Africa.

Loss-making Sabena has been desperately seeking a financial partner for more than a year in a struggle to recapitalise. The Belgian government has pledged to invest pounds 150m in the carrier providing the carrier can attract a further pounds 100m in outside investment.

The Air France deal has been pending for a year but complicated by the political implications of such a merger. Relations between Walloon and Flemish coalition partners in a deeply divided government are at an all-time low.

With the press regularly invoking the prospect of a separatist Flemish state within Belgium, there is concern at the takeover of the national carrier by a French company.