Intensive talks continued yesterday between Belgium's federal government and Swissair Group to find a way to save Sabena, spokesmen for the financially troubled Belgian airline said.

A board of directors' meeting to decide Sabena's future, scheduled for yesterday, was postponed as the government and Swissair - which co-own the carrier - continued talks, said Sabena spokesman, Mr Wilfried Remans. "Everything is possible," added Swissair spokesman, Mr Patrick Jeandrain. "We will continue talking in order to find a solution."

Sabena's future largely hangs on the decision of Swissair - which is itself in serious financial straits - on whether or not to prop up its ailing Belgian subsidiary. The head of Swissair, Mario Corti, said on Monday he intended to get rid of loss-making subsidiaries, lowering the curtain on Swissair's failed strategy of buying up smaller European carriers.

But Belgian Prime Minister Mr Guy Verhofstadt warned that Brussels would seek compensation if Swissair refused to honour its financial obligations agreed in April 2000 on the refinancing of Sabena.

The Belgian government holds 50.5 per cent of Sabena, the remainder being held by Swissair. But EU legislation restricts it from intervening alone to save one of Europe's oldest airlines.

It is estimated that Sabena needs up to #1 billion (£790 million) to put into place a structuring plan that would lift it to profitability by 2005.

Without a fresh injection of capital, Sabena's board of directors could be forced to declare the airline bankrupt, after it lost #325 million euros (288 million dollars) last year.