Sterling Airways bailout falls through

sterlingnewlogo_20080328_041The bankrupt budget carrier Sterling Airways, which is based in Copenhagen, has lost the confidence of the venture capital firm Axcel that was planning to buy the airline. Axcel officially stated the reason it backed out of the deal was because it could not come up with a viable long-term business plan to place Sterling back in the game.

But some insiders have told the Copenhagen Post that there are other reasons behind Axcel’s abandonment, thus leaving its 450 former employees still out of work. The law firm that is representing the case, Kromann Reumert, indicates that the labour unions are a major factor hindering the bailout.

Both the Cabin Attendants Union and Dansk Funktionaeforbund oppose the deal, saying that Axcel would get all the advantages and the staff virtually nothing. The two unions state that the deal on the table would end in ‘social dumping’ where Axcel gains profit from a low purchase price, but Sterling’s employee still keep their relatively low wages.

A Kromann Reumert spokesperson gave a different explanation: “In a company like Sterling that has high operational costs, there’s always a chance the new owners will suffer heavy losses in the start-up phase if seats aren’t filled and earnings don’t immediately reach previous levels again,” spokesperson Lisa Bo Larsen said. Axcel apparently is no longer prepared to take that risk.

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