Greek flag carrier Olympic Airways has been told it must repay millions of dollars to the government just as a preferred bidder emerges for its part-privatisation.
Olympic, which has been under investigation by the European Commission (EC) since March 2002, has been told to repay €194 million ($194 million) in state aid. The EC says restructuring cash given to Olympic between 1994 and 1998 was "misused", and the carrier received new unlawful aid about which it was not told. The EC considers that "all this aid enabled Olympic Airways to benefit from preferential treatment compared with its competitors".
Olympic says that it will contest the ruling as the government evaluates the proposal from its preferred bidder Golden Aviation for the part privatisation of the country's flag carrier.
Golden Aviation is owned by Greek shipping magnate Stamatis Restis, and has been selected from six bidders. The government is being aided in its evaluation by three financial advisors: The National Bank of Greece; Commercial Bank; and Alpha Finance.
The government's earlier bid to privatise Olympic collapsed in March 2002 when an Australian consortium which had been elected to take a majority stake in the carrier dropped out. However, the government is determined to sell at least 51% to a strategic investor, and believes that the EC's ruling will not hinder the privatisation process.
But any deal now is for flight operations only, including mainline Olympic Airways, its domestic and regional subsidiary Olympic Aviation and charter arm Macedonian Airlines. The carrier's non-flying activities, such as its simulator/training business, are not included, its catering arm having already been sold last September to supermarket chain Everest and in-flight caterer LSG Sky Chefs for €16.1 million.
But time is running out for Olympic. With the Olympic Games and elections looming in 2004, increasing competitive pressures, and now the demand to repay state aid, the government faces a tough challenge to write a new page for its carrier. Olympic says its large restructuring efforts this year will enable it to move slightly into the black in 2002 on revenues of €716 million.
Meanwhile, Olympic and its main domestic rival Aegean Airlines will face new competition in the second quarter of 2003 from Cyprus Airways subsidiary Hellas Jet. Having been rejected by the government in its bid for a 65% stake in Olympic as part of a plan to expand into the Greek market, general manager Christos Kyriakides says Cyprus Airways decided to proceed with its own plan.
Hellas Jet will link Athens with major European cities, initially operating three Airbus A320s acquired on operating lease from CIT and configured in two classes, with a fourth and fifth aircraft expected to be added in 2004/2005.
"We will be using frequency as a tool," says Kyriakides. "This means that wherever possible we will have at least a daily frequency. We will also capitalise on synergies between the two airlines, making full use of Cyprus Airways' network in Europe," he says.
GÜNTER ENDRES LONDON
Source: Airline Business
