Olympic Airways’ second sale bid hits turbulence

Greece’s second attempt to privatize flag carrier Olympic Airways has ended in failure as the privatization advisers yesterday called an end to negotiations with preferred bidder Golden Aviation. The high-profile fiasco could put in jeopardy the government’s ambitious divestment program this year, which is targeting revenues equivalent to 2 percent of gross domestic product from the sale of state-owned assets. The failed privatization of Olympic Airways came one day after the collapse of talks between the government and the consortium of the Latsis group and Russian oil giant Lukoil on the sale of a minority stake in oil refiner Hellenic Petroleum. A terse announcement from privatization advisers National Bank of Greece, Alpha Finance and Commercial Bank subsidiary Investment Bank said talks with Golden Aviation on the sale of a majority stake in flag carrier Olympic Airways had been terminated. It did not give reasons for the decision. Golden Aviation, led by shipowner Stamatis Restis, was selected as the preferred bidder in December. It had offered 150 million euros for a 70 percent stake. It was Restis’s second shot at Olympic Airways. The shipowner was one of four bidders who submitted offers for the national airline in 2001. The bid failed to make it to the second round. The government is expected to initiate talks with second preferred bidder Aegean Airlines. Roula Saloutsi, spokeswoman for the privately owned carrier, told Kathimerini English Edition that Aegean Airlines «is still interested in Olympic Airways.» «We will wait for the government to make the next move,» she said. The government yesterday sought to downplay the two high-profile privatization failures. Economy and Finance Minister Nikos Christodoulakis told a parliamentary committee that the government «will not sell [state-owned assets] for a song» and that the divestment program would not be affected. He said the carrier would continue its restructuring and keep on flying regardless of the outcome of the privatization process, underlining the government’s determination to maintain a flag carrier for the 2004 Olympic Games. The restructuring plan centers on dropping long-haul routes, shedding staff, selling non-core activities, such as its catering arm and electronic seat reservations subsidiary, and transferring liabilities to another company. Olympic is estimated to need a capital infusion of 150 million euros to keep it flying. It posted heavy losses in 2000 and has yet to publish accounts for 2001. It has been ordered by the European Commission to repay 194 million euros in misused state subsidies to the national treasury. The government has disputed the amount and said it plans to fight the ruling.