Julian Moxon/paris
Olympic Airways is to acquire a fleet of Next Generation Boeing 737s and Airbus A340s. The airline is close to resolving its long-running dispute with the European Commission (EC), which has held up payment of the last two tranches of its state aid. Resolution of the dispute will open the way for the Greek airline to complete an overhaul of its fleet and route network.
Olympic received the first tranche of its state-aid package in 1995, but the EC blocked further payments after accusations that the carrier and its Government owner were breaching the terms laid down. An agreement is now expected in September, however.
The EC also objected to state interference in the running of the airline and unauthorised funding amounting to Drachma 11 billion ($38 million).
Separately, a full investigation was launched after complaints from British Airways, KLM and SAS about the airline's monopoly ground-handling practices at Greek airports.
To address accusations that Olympic had been providing sub-standard third-party ground-handling services at Athens, the Greeks have agreed to allow a third-party competitor into the airport from the start of 1998 and a second new ramp handler a year later.
The deal will allow Olympic to receive the remaining state aid, amounting to Drachma 23 billion and Drachma 12 billion, which should have been paid over the past two years, following the initial Drachma 19 billion payment. The EC has also approved the unblocking of $378 million in Government loan guarantees, which will enable Olympic to raise the funding to renew its fleet.
Chief executive Jordan Karatzas says that his strategy for upgrading the fleet will begin with replacing the four long-range Boeing 747s with Airbus A340s. The airline has already placed orders and options for four A340-300s, but eventually plans to have up to ten. The A340-500 and -600 will also be evaluated in the longer term.
The short-haul fleet will be re-organised around the Boeing 737-800, with a previously unannounced deal for four firm and four options. This is expected to grow to 25 to replace Boeing 727s, 737-200/-400s and Airbus A300s.
Karatzas says that Olympic's route strategy is also being revised. "We are concentrating on opening routes to central and east Europe and the Balkans and on developing services to South-East Asia and Australia," he says. Three new routes, to Budapest, Moscow and Prague will have been opened by October, and there are plans to open more to Bucharest, Belgrade, Sofia and Tirana.
Talks with a major US carrier are expected to lead to a codesharing deal by late this year, while negotiations are under way with South-East Asian carriers, he says.
Source: Flight International
