In late May, a grim man strode into the Brussels headquarters of Sabena, Belgium's national airline. He had come to talk with Pierre Godfroid, chairman of the money-losing carrier. It wasn't long before employees figured out that the mystery man was the industry's most ruthless cost-cutter, Robert L. Crandall, chairman of American Airlines parent AMR Corp.

For an airline still struggling to transform itself from a once protected monopoly into a competitive enterprise, the barbarians were at the gate. And right behind Crandall came Swissair, which opened talks with Sabena amid reports that it wants a 49.5% stake. The bottom line: "Sabena's in play," says a top manager of one of the airlines in pursuit.

Crandall's visit set off alarms as far away as Atlanta. Ronald W. Allen, chairman of Delta Air Lines Inc., which has capacity-sharing arrangements with Sabena, wanted an explanation. Godfroid flew to Delta headquarters to reassure executives that Crandall was just coming in for exploratory talks.

Some exploration. Crandall said American was interested in the same kind of capacity-sharing deals Delta has--such as block purchases of seats and flight linkage in reservation systems--as well as a minority stake.

Such talks aren't new to Sabena. In 1991, the Belgian government offered a 37.5% stake to outsiders. American, British Airways, and KLM Royal Dutch Airlines all showed interest but were rejected. The Belgians feared they would demand big cuts in Sabena's staff, then loaded with patronage workers. The nod went to Air France, run by a sympathetic Socialist government. But since the $182 million deal was sealed in April, 1992, neither airline has benefited much. Sabena lost $136 million last year. Air France lost $1.5 billion last year and has negative cash flow. "On paper," says Bertrand d'Yvoire, an airline consultant with Paris-based Consultair, "it's bankrupt."

Inevitably, politics will play a role in any sale. Air France is not rushing to sell its Sabena stake, because the proceeds from a sale would hardly solve its financial problems, including $6.8 billion in debt. Belgium, which favors a sale, hopes to push things along by tentatively backing a French plan before the European Union to give Air France $3.5 billion in state aid. That's just one of many ways to grease a deal.

SWISS STAKE. American is the most logical buyer. It's the only major U.S. carrier without a European partner. And Brussels' uncongested airport--adding 23 gates in December--would make a good hub for the Fort Worth (Tex.)-based carrier, which trails Delta in Europe.

A European buyer, such as Swissair, would be more palatable for France, however. And Delta, which doesn't want to be drawn into a bidding war as it tries to cut $2 billion in costs by 1997, could live with a choice of Swissair, its ally. Swissair can't benefit from dereg-

ulation of the EU airline industry because Switzerland isn't an EU member. But a Sabena stake would give it a piece of national carriers' new freedoms to fly around Europe. Bob Crandall made an impressive entrance, but Swissair could be the one to walk away with the prize.

   TABLE: WHO'S EYEING SABENA
      
      AMERICAN        Needs Sabena as a partner to bolster its competitive
                      position in Europe
      
      DELTA           Wants to preserve its marketing relationship with Sabena
                      by blocking any deal with rival American
      
      SWISSAIR        Wants a link with a European Union carrier to take advantage
                      of deregulated airline market
      
      DATA: BUSINESS WEEK
      
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