The European Commission has approved a Belgian government bridging loan of €125 million to troubled Sabena airlines.
EU Transport Commissioner Ms Loyola de Palacio said the green light was given because the bridging loan was "closely in line" with strict 1999 guidelines for state aid to rescue companies on the verge of collapse.
The decision gives time to Sabena - one of Europe's oldest and best-known air carriers - to complete a radical restructuring plan before court-ordered protection from creditors expires on November 30th.
Sabena was already trying to put its financial house in order when the September 11th attacks in the United States triggered a sudden drop in passenger numbers on airlines worldwide.
But problems were aggravated when Swissair, which owns 49.5 per cent of Sabena, failed to come through with a scheduled capital injection when it ran out of cash to sustain its own operations.
The Belgian government owns 50.5 per cent of Sabena, but is eager to reduce its stake.
AFP