Gordon Werner

Virgin Express sues Sabena over code-sharing deal

BRUSSELS, Aug 28 (Reuters) - No-frills airline Virgin Express said on Tuesday it was suing Sabena for reducing the number of Virgin Express seats it will sell under a code-sharing agreement.

The airlines have an eight-year code-sharing contract, which began in 1996-1997, under which Sabena -- the Belgian national airline -- agreed to buy 80 seats on each of Virgin's flights to and from Barcelona and 85 seats on each of its flights to and from London and Rome.

Sabena agreed in 1999 to increase the number of seats to 96 after Virgin promised to remove six seats out each of its planes to improve the seat pitch.

Virgin said on Tuesday Sabena "has confirmed its intent to unilaterally reduce the number of contracted seats" to 80-85.

"We were informed by Sabena that as from the winter season they would not sell more than 80 seats... We see that as a plain breach of the amendments that were agreed to the contract," Virgin Express Managing Director Neil Burrows told a news conference.

"We feel it is right and proper that the matter should be decided by an independent legal authority and that is the Belgian court," Burrows added.

Sabena, which said earlier this month it would cut 1,600 jobs as part of a wide-ranging restructuring plan to return the loss-making airline to profitability by 2005, confirmed its intent to cut the number of seats.

Virgin Chief Financial Officer Laurent Jossart told Reuters the reduction of the number of seats could cost Virgin about 15 million euros annually. The contract with Sabena accounts for about 40 percent of Virgin's business.

Virgin filed on Friday for summary proceedings at the Brussels commercial court. Initial hearings are scheduled to begin on Tuesday, with a ruling expected within three to six weeks.

Sabena said in a statement it was "suprised that Virgin Express did not use the arbitration clause explicitly foreseen in the contract."

The airline added that the increase to 96 seats was only "temporary" and said that the cost of the changes to Virgin's planes were compensated by the price of 96 seats until October 2001.

But Burrows disputes those figures, noting that all his planes had to be reconfigured.

"They (Sabena) signed a legally binding contract for a legally binding period," Burrows said.