TOM GILL / LONDON
Greek government-owned Olympic Airways is selling its catering arm in a bid to kick-start the lossmaking airline group's stalled privatisation process.
The government, which owns 68% of Olympic Catering, plans to follow the disposal with the sale of stakes in a string of non-core companies, including the Galileo Hellas reservation system and a refuelling company, by the end of the year. Athens also intends to sell Olympic's ground-handling and maintenance businesses by that time.
"The idea is to slim down Olympic and make it easier to privatise the core business, "says Michael Hadjipavlou at Deloitte & Touche, Athens, which is advising on the sale of some subsidiaries. "The aim is for at least 51% of the airline to be in private hands," Hadjipavlou says, adding: "If somebody wants 100%, so much the better for the Greek state." The airline is, meanwhile, heading for break-even, following efforts at cost-cutting and a push to raise fares, according to the Greek transport ministry.
"Olympic made a loss last year, mainly as a result of the ground-handling operations, which have been hit by increasing competition. But revenues from flight operations are increasing. We should be close to break-even in 2002," says a ministry official.
The ministry expects turnover to hold roughly steady at €792 million ($790 million) in 2002, while costs should fall from €950 million to €775 million, helped by 450 lay-offs. Revenues from flight operations are forecast to grow from €563 million to €609 million.
In the first quarter, Olympic increased its domestic market share by 18.3 percentage points to 58% compared to the first three months of 2001, and its load factor by 7.14 points to 60.18%, despite an 18% fall in domestic passengers and a 9.4% drop in international passengers, the transport ministry adds. Olympic raised average fares by 29% at home and 11.7% overseas.
Since mid-2000, the airline has substantially scaled back operations. There has been an 18% reduction in flights. Staffing numbers have also been cut by 13% and overtime costs reduced to €2.35 million, compared with €17.9 million in 2000. Fleet costs have been slimmed and a further reduction is expected with the impending sale and leaseback of two Boeing 737-400s.
Despite the upbeat results, the airline is facing considerable uncertainty as a result of a European Commission investigation into state-aid approvals, which is due to be completed within two months.
Source: Flight International
