Julian Moxon/Paris
Olympic Airways is stepping up efforts to resolve its latest management problems in an attempt to unblock its final tranche of state aid and to prepare the airline for the pending liberalisation of the domestic Greek air market.
The state-owned carrier lost another president in late December and attempts to appoint a replacement have failed, reflecting what a senior airline source says are "political difficulties" between the Government and Olympic Airways' management.
"We have a very limited time in which to become much leaner and more efficient," says chairman Jordan Karatzas, who is handling the running of the airline. He is "very anxious" to see through the programme of planned cost-saving and revenue-increasing reforms called for in a recent study by an outside consultancy.
In July, Greece will liberalise its internal air-transport market, while passenger ground handling at Athens Airport has recently been opened to competition. "I'm not panicking, but I'm certainly worried," says Karatzas. The Goldair Handling consortium, combining Frankfurt Airport, KLM and Lufthansa with Greek aerospace organisations Aegean Aviation, Goldair and Plotin, is likely to be the sole bidder for the passenger ground-handling contract and says that it also plans to tender for the forthcoming ramp-handling contract.
At the same time, the Greek Government is withholding Olympic's final tranche of state aid, worth Dr35 billion ($123 million), until the management issues are resolved.
Karatzas says that the block on state aid will have no effect on the contracts signed for four Airbus A340-300s and eight Boeing 737-800s, due for initial delivery at the end of 1998 and the first half of 2001, respectively. "But it means our fleet and restructuring plans are on the backburner for the time being," he adds. In the longer term, the airline wants up to ten A340s and 25 737s to replace its Airbus A300B4s and Boeing 727s and 737-200s. "We're looking at hushkitting the 737s and keeping the A300s for longer," Karatzas adds.
The report says that revenues and costs could both improve by 20%. "But we need a period of stable management before that could happen," says Karatzas.
Olympic's financial health has been steadily improving, with early estimates for 1997 putting net profits at Dr14.4 billion on sales of Dr270 billion. In 1996, net profits reached Dr11.2 billion as the airline put behind it years of losses. Passenger traffic increased by about 9.4% in 1997, with load factors edging up to 65.7%, while employee productivity grew by 7.8%.
Meanwhile, Olympic is close to starting a codesharing deal signed with Trans World Airways, initially between New York Kennedy Airport and Athens. TWA withdrew its own Athens feeder services in early 1997.
Source: Flight International
