ECONOMY

Olympic Airlines will be viable, minister promises

Greece’s new flagship carrier, a smaller, debt-free airline to be created out of the old Olympic Airways, is expected to be viable in its first year of operations, Transport Minister Christos Verelis said yesterday. «We believe (Olympic Airlines) will be viable. Considering that 2004 will attract many visitors to Greece because of the Olympic Games, Olympic will be the company to benefit the most,» Verelis told Flash Radio. After failing in its efforts since 2001 to find a buyer for the loss-making, indebted Olympic Airways, the government last Friday unveiled a bill to establish a new airline, for which it still wants to find a buyer. Olympic Airways will be chiseled into a slimmer carrier, renamed Olympic Airlines. It will start flying with fewer pilots and a share capital of 140 million euros ($152.9 million). The launch date of the new company has not been announced but is expected to follow soon after passage of the bill in Parliament. Debate on the bill begins tomorrow. Under pressure from the European Commission to reveal its revamp of Olympic, the government has said the new business plan fully complies with EU laws barring state aid to the sector. Three Greek banks – National, Alpha and Emporiki – have already started talks with potential buyers to sell at least 51 percent of the new Olympic Airlines. «There are talks going on with the banks, there are exploratory discussions,» Verelis said. «The market is waiting for the procedure to be completed in Parliament, then interest will be expressed (for Olympic).» Under the government’s plan, proceeds from the intended privatization will be used to cover old Olympic Airways debt. Based on the old carrier’s 2002 income statement, Olympic’s accumulated loss has widened to 512 million euros ($562.1 million). The new carrier will be engaged only in flying activities, consolidating the routes of Olympic Airways and its subsidiaries Olympic Aviation and Macedonian Airlines. The old Olympic will provide ground, cargo and technical support at competitive prices. The government said last week labor costs will fall by about 45 percent at the new Olympic, with a smaller work force of 1,850. After lengthy negotiations with unions, new agreements trim current perks, retirement and insurance schemes. Pilots, angry over what they say is the government’s reneging on their deal, are threatening to strike. Olympic Airways Chairman Dionysis Kalofonos warned the pilots that the airline would not «stand idle» but would lease charter aircraft to carry passengers. (Reuters/ANA)