Brussels ends 15-year wrangle as Olympic Airlines is told to pay back illicit state aid
* David Gow and John Hooper
* The Guardian,
* Thursday September 18 2008
* Article history
The European commission yesterday reshaped the EU’s aviation sector by forcing Olympic Airlines to repay to the Greek government €850m (£671m) in illegal state aid before it is privatised.
Plans to liquidate Olympic, which was founded by Aristotle Onassis 51 years ago, and sell some of its assets at market prices to private sector investors by the end of next year were approved yesterday by Brussels. The new company, codenamed Pantheon, will be granted Olympic’s name and famous five-ring logo. It will also acquire 65% of its capacity, including its landing slots. Two other new companies will acquire ground-handling and maintenance assets.
Yesterday’s deal ends 15 years of litigation between the EC and successive Greek governments which pumped billions of euros and drachmas into the perennially loss-making Olympic to keep it afloat and buy off union resistance to restructuring.
Antonio Tajani, EU transport commissioner, said Brussels wanted a “definitive break with the past” while Greek transport minister Costis Hatzidakis said privatisation would finally resolve “an issue that has beset Greek society and politics for some 30 years”.
Lawyers said the transaction, which resembles the liquidation of Belgian national carrier Sabena and its re-emergence as Brussels Airlines, set an important precedent for aviation privatisations. But so far no private investors have emerged.
The deal came as the head of the consortium planning to take on Italy’s bankrupt flag carrier, Alitalia, said it would withdraw its offer today if the unions failed to accept its terms. Roberto Colaninno said that after two weeks of talks “there is nothing more to argue about”.
The representative at the negotiations of prime minister Silvio Berlusconi said responses from Alitalia’s nine unions had to be received before a meeting of the consortium’s shareholders this afternoon.
It brings closer the emergence of three dominant players in EU aviation: British Airways, Air France-KLM and Lufthansa. BA is seeking to take over Spain’s Iberia while AF-KLM may yet acquire part of Alitalia.
Lufthansa, which agreed this week to buy Brussels Airlines for a maximum of €250m by 2011, already owns Swiss and could take over BMI, Austrian and SAS.
Tajani, who approved the Olympic privatisation plan because it involved no state aid, said the transaction avoided bankruptcy and meant the new owners would take on none of the airline’s liabilities or debt.
His senior officials admitted that the Greek government was unlikely to recover all the illegal aid it had paid out.