Julian Moxon/PARIS
The European Commission (EC) has come in for further criticism over its latest decision to unblock the final tranche of state aid for Olympic Airways, but Brussels has brushed off complaints that it is going softon government handouts, pointing to new conditions being imposed on the Greek carrier as evidence.
The EC's transport directorate says the Olympic decision came only after the Greek Government gave "legal guarantees" that it would not interfere in the running of the airline. The original state aid package, worth a total of some Dr545 billion ($1.8 billion), was signed off in 1994. The bulk of the aid was used to cancel the airline's massive debts, but also included a cash injection of Dr54 billion to be paid in tranches over Olympic's three year restructuring.
The first Dr19 billion tranche was paid in 1995, but the EC froze further payments in 1996 after the Greek Government breached the conditions attached to the approval. The state had also given the airline a further unauthorised Dr13.2 billion payment to cover redundancy and other costs.
In the latest ruling, the EC extends the airline's three-year restructuring period from 1997 to 2002 and reduces the cash payments to an overall total of Dr40.8 billion, to take account of the redundancy pay-out.
Although Brussels has also agreed to unblock a Dr378 billion Government loan for fleet development, new conditions are imposed on the airline's ability to raise its market share.
These include guarantees from the latest Olympic management team, now in place for seven months, that the carrier will not carry out price leadership on routes from Athens to Stockholm and London and will maintain seat capacity growth "in proportion to the increase in market capacity".
The EC maintains it has been "extremely tough" in the case of Olympic, by forcing a reduction in the original aid and insisting that the second and third tranches of the money, payable now and in 1999, would be subject to six-month instead of annual reporting periods. "If they don't play ball, we will re-open the decision and review the case again," it adds.
Brussels believes that the Olympic case marks a close to the state aid issue, with only Alitalia now under scrutiny as it receives aid through to next year.
The decision, however, comes only weeks after the European courts re-opened the controversial issue of the Fr20 billion ($3.5 billion) state aid package that was signed off for Air France in 1994, alongside similar packages for Olympic and TAP Air Portugal. In all, Europe's state owned airlines have taken some $12 billion in aid during the 1990s.
Source: Flight International
