ECONOMY

EU Commission launches formal probe of airline aid

On the day the European Commission announced it will formally investigate the legality of state aid provided to state-owned Olympic Airways, members of a militant Olympic union assailed state plans to cut jobs at heavily indebted Olympic and privatize the airline. «The European Commission expressed doubts about some of the compensation (approximately 5 million euros) granted to Olympic Airways and Aegean Cronus by the Greek government following the attacks on 11 September, 2001 in the USA,» a Commission statement, released yesterday, began. «The Commission considers that the compensation for flights canceled after 14 September, 2001 and for losses in areas not closed to air traffic seems to be incompatible with European legislation on state aid.» «The Commission’s decision is fully in line with its communication of 10 October 2001 on ‘The repercussions of the terrorist attacks in the United States on the air transport industry.’ The Commission had accepted in this communication that some types of aid, including aid for insurance and losses suffered through the closure of part of the air space or ‘aid to make good the damage caused by natural disasters or exceptional occurrences,’ could be granted to the air transport industry by way of exception. «The Commission had nonetheless placed a number of conditions on the authorization of such emergency aid schemes. Greece’s 5-million-euro scheme did not appear to comply fully with these criteria. The formal investigation by the Commission will focus on the following points: «As regards part of this amount, Greece was unable to justify any direct link between the losses for which compensation could be given and actual flight restrictions, as required by other Commission decisions on the subject. The losses in question concern, in particular, cancellations of flights to destinations closed to traffic or by passengers in transit from or to the transatlantic network on the days in question. «Part of the aid concerns 15 and 16 September 2001, i.e. outside the period covered by the Commission communication. The Commission has adopted decisions already against schemes extending beyond that period.» The Commission is continuing to examine the compatibility of other emergency aid schemes by other EU member states. Regarding Olympic, the Commission has asked the Greek government to reclaim 191 million euros in illegal subsidies to Olympic. The government disputes the figure. Representatives of Olympic flight attendants yesterday assailed a business plan for a revamped Olympic published by consultants Kantor. «This is an attempt to adapt the recipe of bankruptcies, job cuts and radical change of employment relations tried in the private sector to the public sector,» union representatives said yesterday. They said the plan for a leaner Olympic would be costly to the State and will cut flight attendants’ salaries. Unions of Olympic employees are opposed to Olympic’s restructuring and privatization. They blame management for the airline’s predicament, rather than the huge overstaffing and benefits that are out of proportion to employee productivity.