The European Court of Justice (ECJ) has called time on the Greek government's machinations to stave off the financial collapse of flag carrier Olympic Airlines, ruling that Athens has not done enough to recover €194 million ($244 million) of unlawful aid.
The ruling comes as Greece tries to push through a privatisation of Olympic Airlines, which was formed in 2003 when the government effectively split off the airline operations to the newly named carrier, leaving the original Olympic Airways with the debts. Olympic Airways provides airport services for Olympic Airlines.
Greece will now be given breathing space to comply with the court's recommendations, but if it fails to do so, the European Commission (EC) is likely to bring a second case, which could result in the Greek government being ordered to pay a fine, either as a lump sum or a daily charge, until it complies with the judgement. "It is up to the EC to monitor the situation," says the ECJ.
The case was brought to the courts by the EC in 2002 on the grounds that Athens had failed to implement a restructuring plan that was a precondition of a rescue aid package agreed in 1998. In 2003, Brussels added allegations of new state aid to the case, including the Greek government's toleration of the non-payment of sales tax on aircraft fuel and spare parts, rent payable to the airport from 1998 to 2001 (€2.5 million), airport charges to the new Spata airport (€33.9 million) and a tax imposed on passengers on departure from all Greek airports (€61 million).
The EC says Greece needs to repay the €41 million of initial aid and €153 million for the subsequent support. The ECJ also says that the transfer of the assets of Olympic Airways to the new company Olympic Airlines made it impossible to recover the debts of the former company through the new company. "The transfer has created an obstacle to the effective implementation of the EC's decision," says the ECJ.
As regards recovery of the initial aid, the ECJ notes that Greece has "failed to fulfil its obligation to recover that amount from the beneficiary company". As regards the subsequent aid, the ECJ notes that Greece has referred to "national difficulties" without explaining why these made it impossible to recover the aid.
Greece was keen to keep its struggling flag carrier afloat at least until after the Olympic Games in Athens in 2004, and although five parties have submitted bids for the airline, including the backer of German low-cost carrier DBA, previous attempts at a sell-off have come to nothing.
COLIN BAKER LONDON
Source: Airline Business
