Gus Vlassis/ATHENS Chris Jasper/LONDON
British Airways has scrapped plans to invest in Olympic Airways, a move which means the Speedwing consultancy's management contract with the Greek airline will be terminated.
BA, of which Speedwing is a subsidiary, had been due to make an offer for 20% of Olympic by 28 June, but last Friday told the Greek Government that the deal was off. The UK flag-carrier adds that the split was by "mutual agreement", while Athens sources say the two concluded "a peaceful divorce".
BA was given first option on acquiring a share in ailing Olympic as part of the Speedwing deal, but withdrew after new chief executive Rod Eddington decided the move was against his focus on core activities. Athens valued the Olympic group at $300-400 million, based on consultants' reports - significantly higher than BA's estimate. "Having just sold Air Libert‚ because it was loss-making and a non-core business, it would have gone against the grain to invest in Greece," says an airline source.
New offers will now be invited for Olympic, with Speedwing's contract - running until the end of 2001 - due to be terminated soon. The privitisation of the airline is central to the freeing up of state aid frozen by the European Commission and regarded as vital to the airline's rehabilitation. The Greek airline's main value is in its new base at Athens Spata airport, due to open next March.
The Speedwing management team, led by Rod Lynch, was called in to make Olympic fit for privatisation, but was criticised in Greece for failing to turn it around. Speedwing sources defend its record, saying "costs are now a bit lower, revenues are significantly higher, and the product has changed beyond all recognition". One source adds: "Revenue management - which was all over the place - is still the big problem".
Source: Flight International
