GERALD BUTT / NICOSIA
State-owned carrier faces job losses and radical restructuring after Athens government fails to secure buyer
The Greek government has finalised an emergency plan for Olympic Airways in an eleventh-hour attempt to save the debt-ridden national carrier from collapse.
The scheme comes after the government's failure over the past year to find a buyer for the airline, and involves around 2,000 job losses - more than 25% of the workforce. The government will also seek to raise up to c150 million ($131 million) from the private sector to stave off bankruptcy - and sell 51% of the airline in the process.
The emergency plan also includes splitting the airline's flight operations from other activities such as catering, maintenance and ground-handling to make them more attractive to buyers. A review of route profitability will also be carried out.
Last summer, the government's privatisation advisors, Credit Suisse First Boston, named Athens-based Axon airlines as the preferred bidder for Olympic, but it ceased operations at the end of November. Cyprus Airways, the second choice, had already pulled out by this stage, and is considering setting up its own subsidiary in Greece. The third bidder for Olympic, Australian-based venture capital company Integrated Airlines Solutions Consortium, failed to provide sufficient financial guarantees ahead of the deadline.
The plan gives no details on how Olympic's debt - estimated by unions at several hundred million euros - will be reduced.
The unwelcome attention of the European Commission could also cause problems for Olympic. Under European Union regulations, Athens cannot invest any more state funds into Olympic. But local press reports on 22February said, a state-owned Greek bank, the Commercial Bank of Greece, has lent the airline c16 million to keep it afloat until the summer tourist season.
The Commission has already received a complaint that the airline broke a deal, signed in the 1990s, permitting state aid for the airline in exchange for undertakings on accounting and taxes. It will decide whether to investigate the complaint this week.
Apart from its cash crisis, Olympic also has to deal with removal from service of its ageing Boeing 737-200s from April because of International Civil Aviation Organisation Chapter 3 noise regulations.
Source: Flight International
