French regional files suit against SAir Group

 - May 27, 2008, 6:03 AM

Air Littoral, one of the three French regional airlines sold by SAirlines this summer, has filed a lawsuit in Switzerland to recover funds owed to it by the bankrupt Swiss group. Meanwhile, the French airline continues its own restructuring process and seeks to increase capital to offset an estimated 10- to 15-percent loss in traffic by the end of this year.

The French regional airline claims SAir owes it FFr850 million ($116.4 million) under a June 30 agreement in which the troubled owner of Swissair divested itself of Air Littoral, AOM and Air Liberté. Air Littoral claims it is entitled to a similar sum for various other items, including a charter commitment for two ATR 42s. Air Littoral president Marc Rochet, who headed the consortium that bought the airline, said he also seeks help from the French government to overcome the “indirect consequences” caused by Swissair’s nonpayment and the direct consequences of September 11.

Rochet said he hopes to attract fresh capital from local interests, industrialists and banks within the context of the airline’s major restructuring effort. The company remains discreet about which companies and institutions would contribute to Air Littoral’s capital base, but indications point to Bombardier and a British-based pension fund as possible investors.

As part of its restructuring process, Air Littoral plans to sell its headquarters in Montpellier, France, before the end of this year and operate provisionally from the new location of its ESMA flight training academy–the proposed site of a new Air Littoral headquarters building scheduled to be built within the next two years. It has already closed several loss-making routes, added two new destinations, sold seven aircraft and cut 200 jobs.

Air Littoral’s chances of recuperating the funds due from SAir met with complications on November 7, when Sabena, the Belgian national airline in which SAir holds almost a 50-percent stake, fell into bankruptcy.