Brussels threatens to leave Belgium

Brussels Airlines, Belgium's biggest carrier, threatened to relocate if the government did not offer tax breaks to help it compete against Ireland's low cost giant Ryanair, De Morgen daily reported on Wednesday. "Ideally, we'd like to stay in Belgium, but this can't go on," Brussels Airlines chief executive Bernard Gustin told officials according to the paper. "If you are not ready to do something against the distortion in competition, we'll go looking for another headquarters," he told the officials. The paper reported that the carrier, a spin-off of the now defunct Sabena Airlines, was exploring a move to Luxembourg or Ireland, destinations that offered fiscal advantages to employees, notably pilots. The paper added that the request met with reluctance by the government of Prime Minister Elio di Rupo who is resisting tax breaks to individual companies while the country struggles to implement austerity reforms. Brussels Airlines, in which Germany's Lufthansa holds a 45-percent stake, employs 3,300 people and operates 300 flights a day to 70 destinations from its hub at Brussels airport. Ryanair uses a regional base in Charleroi, 40 kilometres (25 miles) from the Belgian capital. Last week the European Commission said it had extended the scope of an investigation opened in December 2002 into advantages granted Ryanair when it set up operations at Charleroi. In 2004, the Commission cleared some public support from Belgian authorities in favour of Ryanair but ordered the company to repay other aid deemed incompatible -- only for an EU court in 2008 to rule that the Commission had not followed procedures correctly. Ryanair has frequently raised complaints of state aid granted to other European airlines to EU competition bosses.