The Greek government may wish it had consulted the oracle before sacking Olympic Airways' chairman and chief executive Rigas Doganis - the Brussels oracle, that is.
Privately, a senior European Commission official is unimpressed by the sacking in mid-March, which came only a week after transport commissioner Neil Kinnock had rebuked Haris Kastanidis, the Greek transport minister, for interfering in the management of the flag carrier.
Old-fashioned union politics deposed Doganis, despite the official line blaming 'administrative problems'. Ospa, the federation of the carrier's 17 unions, has opposed Doganis since the start of his tenure 13 months ago.
The irony of the decision by Kastanidis - to remove the only chief executive in 17 years to put the carrier in the black with a net profit of GDr6.5 billion ($26.8 million) for 1995 - was not lost on Doganis who expressed 'sadness' at not being allowed to complete the turnaround he began. 'Olympic Airways has a very bright future. We had turned the airline around, and were ready to take off when the government changed the pilot at the end of the runway,' says Doganis.
The Commission is currently considering Olympic's second tranche of state aid and has expressed its concerns about state interference in the managing of the operations and the injection of GDr11 billion in addition to the GDr532 billion approved by Brussels in August 1994. The extra funds were approved by parliament to pay additional early redundancy benefits.
If Brussels requires Olympic to pay back the cash it will be a serious set back, wiping out last year's profit. 'Had that money been in the original package, it would have been a drop in the ocean and would have been approved. But for Olympic to have to pay it back now as we are just pulling out of the hole would be very damaging,' says Doganis.
Publicly, Brussels says management appointments are the sole domain of the shareholders: in Olympics case the Greek government. But privately, one senior Commission official admits the decision is viewed with concern. 'My general impression of Olympic was that [under Doganis] the operation was going in the right direction.'
However, it may not be all bad news as the task of guiding Olympic now falls to new chief executive Jordan Karatzas. Karatzas was originally employed as a consultant by Ospa from New York firm Proudfoot. He joined Olympic in 1994 as deputy director general.
When Doganis joined in early 1994 Karatzas was put in charge of the carrier's subsidiaries. And in a management reshuffle late last year, which Doganis only just survived, Karatzas took over as head of domestic subsidiary Olympic Aviation.
But Karatzas appears to be the sole senior manager with a private sector, aviation background. The new chairman, Professor Nikolaos Blessios, is a researcher with no aviation experience. Continuing as managing director is Captain Miltiades Tsagarakis - who was appointed in December against Doganis' wishes - a fine example that political nepotism is alive and well in Greece. Tsagkarakis is the personal pilot of former prime minister Andreas Papandreou.
Kastanidis, who was appointed transport minister in January, left management in limbo in early February when he announced there would be changes at the carrier. Decisions were frozen by the board and the new management is now left with little time to prepare for the summer schedule.
A source close to the carrier says the Greek government were 'fools' for throwing out Doganis, who was one of the very few European airline managers in the state sector to win the trust and respect of Commission officials.
Two days before his removal, Doganis presented the 1995 results to the board. He announced a net profit of GDr6.5 billion on a turnover of GDr218.5 billion. This compares to a 1994 net profit of GDr370.3 billion, but the latter was inflated by the Greek accounting standards governing extraordinary items. Taking away the GDr400.8 billion extraordinary item - primarily the Brussels-approved state injection - Olympic would have been left with a net loss of GDr30.5 billion on a turnover of GDr230.2 billion in 1994.
A 5 per cent drop in aviation revenues was primarily due to the closure of the Tokyo route, but this helped costs: operating expenses fell 19.7 per cent and wage costs fell 4.4 per cent. The recapitalisation cut debt, leaving capital charges of only GDr1.3 billion in 1995, down from GDr35.4 billion in 1994.
Sara Guild
Source: Airline Business
