Europe’s last national carrier hits turbulence
More info on Olympic Airways…….
Europe’s last national carrier hits turbulence
Helena Smith
Sunday April 9, 2006
The Observer
What would Aristotle Onassis say? At 30,000 feet, flying from London to Athens on an Olympic Airways plane, and there’s not a crystal glass in site. No sound of a pianist either – de rigueur when the rags-to-riches tycoon created the carrier for ‘cosmopolitan jetsetters’. Instead, there’s shrivelled sausage on white plastic plates.
Is Greece’s once fabled airline going to the dogs? The English musician seated next to me seems to think so. But then, so do most Greeks. ‘Political influence and very bad management have allowed Olympic to go down the drain,’ says Savas Savvas, former vice-president of the airline’s union of pilots. ‘These are trying times.’ So trying that Olympic may not be around for much longer.
Last week, as EU regulators warned that Greece must recover €161m in illegal aid to the airline, or face fines, Athens was putting the final touches to a business plan to sell off the carrier that has commanded Greek skies for 48 years.
Olympic is as quintessentially Greek as feta cheese – affection for the airline is such that, despite its mounting debt, the government insisted on making the planes with the distinctive six-ringed livery the official carrier for the 2004 Olympic Games.
But as Onassis discovered (for even he couldn’t wait to get rid of it), Olympic lacks the Midas touch. With the EU Commission threatening to haul Greece before the European Court of Justice for illegally channelling funds into the loss-maker, Olympic seems to be emptying rather than replenishing public coffers.
Transport Commissioner Jacques Barrot, who has given Greece a two-month deadline to comply with the ruling, says the country knowingly flouted rules of fair competition when it injected the subsidies into the company from 1998 to 2002.
Yet more monies (some €540m, according to a separate court ruling issued in September) were poured into the carrier when Greece’s former socialist administration carved Olympic Airlines out of the debt-laden Olympic Airways in 2003. Add on the fines, and the sanctions amount to a sum that experts say will surely trigger the collapse of the institution if it is forced to cough up.
Barrot has demanded that Greece present the EU executive with a rescue plan to restructure and privatise Olympic by the end of the month. Athens has tried selling the airline – the last in the EU to remain wholly state-owned – five times since 1999. The latest endeavour would see the state maintaining a minority stake, with the rest being sold off to private investors, banks, shipowners, Arab financial groups and overseas venture capitalists. When it emerges, the new carrier will have a smaller staff and nimbler fleet – its 33 planes serving a network of 92, rather than Olympic’s current 118 destinations.
With Greece having bankrupted itself hosting the Olympics, and relentless EU pressure to trim the country’s bloated public sector, the free-market New Democrats have made the airline’s privatisation a cornerstone of fiscal reform. Nationalised in 1975, the ailing enterprise is now said to cost Greek taxpayers around €1.5m a day.
But doing anything to the hallowed carrier is a tricky business. Already, powerful unions have threatened mass unrest and there are fears that, with Olympic’s monopoly on routes to popular Aegean islands, the airline’s closure could impact on tourism, Greece’s biggest earner.
Perhaps mindful of the pitfalls ahead, a new form of travel, the island-hopping sea plane, was introduced last month. Now that’s a business venture that would surely put a smile on the face of Aristotle Onassis.