BRUSSELS (Reuters) - The European Commission said yesterday it will take Greece to court for refusing to recover 194 million euros of illegal state aid from Olympic Airways (OA).

Greece, which has been trying for the past four years to to sell off its flag carrier, has said the European Union’s executive arm miscalculated, and has vowed to fight back in the Greek and European courts.

“The fact that the Greek government does not have any intention to comply will drive us to bring the case to the (European) Court of Justice as soon as possible,” said Gilles Gantelet, spokesman for EU Transport Commissioner Loyola de Palacio.

In late 2001, Belgium’s Sabena become the first EU flag carrier to go bust when the government was barred from propping it up.

A formal decision to go to court over Olympic has not yet been made. This would need the endorsement of the full college of the 20 EU commissioners of any recommendation by de Palacio. The Commission decreed last December that Olympic would have to pay back the aid, as it broke tough EU rules banning most forms of state support to airlines.

Greece said on Sunday it would not comply and would only seek 41 million euros from the state-owned carrier, claiming the Commission had overestimated the amount of unfair aid. The Greek Transport Ministry has said the amounts had been exaggerated by the Commission and the press, and claimed certain interested parties were trying to close down the flag carrier. Under EU rules aimed at creating a more competitive market, governments can no longer bail out airlines. They can only make investments that might feasibly be provided by a prudent private investor.

Greece’s most recent attempt to privatize the airline collapsed earlier this month.