BRUSSELS, Belgium, Dec. 28, 2001 (PRIMEZONE) -- Virgin Express (Nasdaq:VIRGY) (Euronext Brussels:VIRE), the Belgian European airline, announces that it has entered into exclusive discussions with Airholding sa/nv and DAT. Airholding sa/nv recently became the new owner of DAT, the short-haul operating division of the former Sabena.
The objective of the discussions is to explore the benefits of a possible merger of the two companies to create a single Belgian airline that would benefit from the strengths of both companies and aimed at reviving the Belgian airline industry. Confidentiality agreements have been signed to allow for the full exchange of information. As a next step the companies have now signed a new commercial agreement that will be in effect until March 28, 2003 and which is an extension of the previous agreement signed on November 14, 2001.
The concept for the proposed new Belgian airline is that it will be a Brussels-based, business-oriented carrier serving the main European destinations with multiple frequencies. At the same time the new carrier will maintain appeal to the cost-conscious leisure traveler, who has come to appreciate the excellent value offered by Virgin Express over the last five years. The parties intend that merger negotiations will be completed during the first quarter of 2002, subject to approval by, amongst others, the EC authorities and the shareholders of Virgin Express plc shortly thereafter. If successful, the two airlines will be integrated under a new brand name.
During the period of discussions Virgin Express and DAT will continue to compete on price and service as separate companies.
In a survey published in the UK Travel Telegraph in December, Virgin Express was ranked as second best low cost/low fare carrier in Europe. This is the result of continuous efforts to improve our product and services over the year 2001. We would like to take the opportunity to thank our staff for their great contribution in that respect and our clients for their support.
On November 7, 2001 we were pleased to announce an extension of our route network and the launch of four new routes to Zurich, Geneva and Gothenburg and Stockholm. These destinations are developing slowly but we observe a continuous and promising improvement.
Trading in October was very strong with passenger load factors averaging 88.5%. Punctuality was above the industry average with 81.4% of our flights leaving on time.
Further to the bankruptcy of Sabena on November 7, passengers booking directly with Virgin Express continue to grow, although yields have suffered as a result of DAT's promotional prices on new tickets and DAT having to accept passenger tickets from the former Sabena. Load factors have also been reduced in the last two months of the year, following the problems caused by the September 11 tragedy and the cancellation of our wet lease arrangement with Sabena, which at that stage accounted for approximately for 40% of our revenues.
Despite the above, and subject to there being no major disruptions to our business or changes its structure, we remain on track to deliver an almost break-even operating result for year-end.
David Hoare, Chairman of Virgin Express, commented, "There is now a unique opportunity to build a new Belgian airline that will provide a comprehensive network and a caring service throughout Europe. We are very excited by the prospect of participation in this venture and hope that our discussions will culminate in the successful creation of a new company early in 2002."