Brussels demands clarification of airline’s operational status

The countdown to what seems will be the final solution to the problems and future of Olympic Airlines, as well as the remnants of its ailing forerunner, Olympic Airways, began yesterday with the publication in the official gazette of the European Communities of the Commission’s demand that the Greek government clearly lays out the operational status of the company. The Commission stipulates that clarifications and details will have to be made available by the end of August, coinciding with the time that the Olympic Games will be wrapping up in Athens. In a letter published on March 16, the Commission announced the beginning of a formal investigation in Greece, in order to establish exactly what was involved in a plan by the previous PASOK government to rescue Olympic Airways, after all other efforts, approved by Brussels, had previously failed to do so. The probe, initiated after allegations submitted by private air carrier Aegean Airlines, is focusing upon the method used for the splitting of the original air carrier into two companies, Olympic Airways and Olympic Airlines. The investigation also aims to ensure that the method and the plans for the privatization of the assets and activities of the two companies are congruent with EU competition policy and regulations and do not amount to indirect public support for the company. The problem arises from the fact that the company did not turn over to the government either a tax collected from all who use Athens International Airport, or taxes owed for the fiscal year 2003. Brussels will also seek to establish that funding extended to the company in order to assist it to move its facilities and services to the new airport at Spata was indeed in accordance with the law. The Commission notes that «the significant losses suffered by the company in the last few years… resulted in a lowering of its credit rating,» leading to Olympic Airways «using a number of tricks» and consequently to a large increase in its debt to the central government and other public agencies, which thus effectively subsidized its continued operation. Illegal support? For the Commission’s departments the truth is quite obvious: Olympic Airways was supported in many ways, mostly illegally, and its division into two parts was «a legal construct evidently aiming at shielding it from the obligation of returning all the supports extended to the company.» In view of the above, it seems that Olympic Airlines will not be saved from the sins of its forerunner (whose state is described as «disastrous») – since Olympic Airlines will also be obliged to reimburse large sums to the government. «Given the continuity between the original company and Olympic Airlines, the order for the return of funds, as per the September 11, 2002 decision, does not concern only the original Olympic Airways, which at the moment has no assets, but also the new Olympic Airlines, which continues with the same activity and has the same assets as the original company…» In other words, even if a buyer is found for the new company, the new owner will most probably have to repay to the government the aid received by the original air carrier. Athens will now have to persuade the Commission that the company is not receiving any new kind of financial support and to lay to rest the suspicion that «the privatization process also seems to include state subsidies to the buyer.»

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