New company to replace Greece's Olympic Airlines
16/11/2005

Having failed to find a buyer for Olympic Airlines, Greece said on Tuesday it plans to launch a new company in April to replace its money-losing national carrier.
(AP, Reuters, Xinhua, Athens News Agency, The Hellenic Radio, Kathimerini – 15/11/05)


Olympic Airlines would likely be relaunched next April, bearing the same logo and a similar name. [AFP]

Greece said on Tuesday (15 November) it would launch a new company next year to replace Olympic Airlines. The announcement followed the authorities' latest failed attempt to find a buyer for the country's ailing flag carrier.

"Despite our serious efforts it is no longer possible to proceed with this privatisation effort ... We are moving towards an alternative solution immediately," Transport Minister Michalis Liapis said after a government meeting. "Draft legislation will be presented to parliament in a few days for the state to create a new airline ... private investors will control the majority (of shares) and be responsible for its management."

The move follows an European Commission (EC) ruling on 14 September that obliges Olympic Airlines to repay up to 540m euros in illegal state aid. The subsidy gave the carrier an unfair advantage over competitors, the commission said, handing Greece a two-month deadline to decide what measures it will take to comply with the decision. Greece faces daily fines if it fails to take action, European Transport Commissioner Jacques Barrot warned.

Olympic Airlines was set up in late 2003 as the successor of Olympic Airways, which was founded by shipping magnate Aristotle Onassis in 1957.

As part of its latest effort to privatise the money-losing company, Greece negotiated with a consortium consisting of the Greek investment company Olympic Investors and the US investment fund, York Capital. It was not clear Tuesday if the consortium would be involved in the new company following the tender's apparent collapse.

Greece, according to Liapis, will keep the investment bank Lazard as its adviser in the launch of Olympic's successor, which will bear the same logo and a similar name when it kicks off next April. Olympic currently flies to 75 domestic and international destinations and carried about 5 million passengers in 2004.

Local media reports suggested that about half the 6,000 people currently working at Olympic Airlines and affiliated state companies stand to lose their jobs, and the carrier's fleet of 40 aircraft will be downsized to between 25 and 30.

"The government has promised to guarantee the employment of all the employees who will not participate in the new company," said Liapis.

Back in September, the EC ruling sparked fears among Olympic employees that the government could decide to close down the company. The company's employee unions thus cautiously welcomed Tuesday's decision.

"The government has finally come to its senses ... but it remains to be seen whether this solution is viable," the AP quoted Yiannis Kallianos, head of the Olympic engineers' union, as saying.

According to some reports, two previous failed attempts to privatise the airline cost 2.5 billion euros, while the losses incurred from operations over the last few years amounted to 1 billion euros.


http://www.setimes.com/cocoon/setimes/xhtm...1/16/feature-01

A plan for Olympic

A rescue plan for the troubled state-run Olympic Airlines should be ready by mid-January, Deputy Finance Minister Petros Doukas said yesterday.

“A full business plan (for the airline’s privatization) is expected to be ready by mid-January and will then be presented to the European Union Commission,” Doukas told Dow Jones Newswires.

“The latest plan intends for private investors to have well over majority control of the airline — not just slightly over 50 percent,” Doukas said.

Greece presented draft legislation in Parliament on November 18 to create a new, privately run company out of the troubled state carrier, but did not specify the size of the government stake.

The latest plan, subject to EU approval, aims to be attractive to new private investors, showing Olympic’s growth potential, Doukas said.

Private investors will run the company on a non-subsidized basis, he said.

Greece has appointed Texas-based Sabre Holdings as a consultant for the privatization plan, Doukas added.

Greece scrapped its last attempt to privatize Olympic on November 15 in the wake of the European Commission’s decision that the company, and its predecessor Olympic Airways, had received around 700 million euros in illegal state subsidies. It was ordered to pay back at least 150 million euros.

EU Transport Commissioner Jacques Barrot said on November 15 that he was waiting to hear from the Greek government about its plans for the airline, but that past illegal state aid needs to be repaid.

Before the EU sanction, preferred buyers had been named as a consortium made up of Greek investment company Olympic Investors and its US partner, York Capital Corp. It was unclear whether those companies would be involved in the restructured company.

Olympic is expected to be relaunched, bearing the same logo and a similar name, next April. Greece will retain the investment bank Lazard as its adviser in the relaunch of the company.

Government officials have promised that staff reductions at Olympic would be achieved through early retirement programs and transfers to other public sector jobs.

Greek media have reported that the 6,000-strong work force at Olympic and affiliated state companies would likely be halved, and that the airline’s fleet of 40 aircraft would be cut to 25-30.

Olympic currently flies to 75 destinations in Greece and abroad and carried about 5 million passengers in 2004. (AP


http://www.ekathimerini.com/4dcgi/news/eco...date=17/12/2005