Greek flag carrier Olympic Airlines faces enforced bankruptcy unless the Greek government stops bailing it out, warns the European Commission (EC).
The EC has decided to launch a formal state aid investigation into the arrangements whereby Olympic Airlines took over the aviation activities of Olympic Airways towards the end of last year. The new Greek government, which came to power in early March, wants to continue the previous administration's plan to privatise the carrier, but the EC warns it has doubts about the arrangements for setting up and privatising the new company.
"This is the last chance for Olympic Airways," says EC transport commissioner Loyola de Palacio. "Unless the privatisation is completed in full conformity with European legislation, the company will have to be placed in liquidation, as was the case with other companies in the competitive air transport sector."
Brussels has long been unhappy with the attitude of Athens when it comes to support for Olympic. In December 2002, Brussels ruled that the carrier had illegally benefited from €194 million ($239 million) in state aid. However, Greece has refused to pay the full amount and the case is with the European Court of Justice.
In the latest investigation, the EC will examine the non-payment of tax debt in 2003: the provision of an advance by Athens to fund restructuring and privatisation; and the non-payment of the airport modernisation tax collected from passengers. Brussels will also review the process whereby the old carrier was transformed into Olympic Airlines, and is taking the view the two are effectively the same company. The EC says that the aircraft, staff, maintenance, ground handling, slots, traffic rights and public service obligations have been transferred to Olympic Airlines and that it has not been allowed to assess whether any potential purchaser would pay a fair price.
Source: Airline Business
