Cabinet delays its decision on the fate of Olympic Airways

The government will decide next week how to proceed in privatizing its ailing national airline Olympic Airways, after a deadline in talks with the front-running bidder, Axon Airlines, expired. The government is expected to say whether it will clinch a provisional deal with Axon or keep the doors open for the two other suitors – Cyprus Airways and Australian-based Integrated Airline Solutions (IAS). Transport and Telecommunications Minister Christos Verelis said the government would announce its next step today, but privatization advisers Credit Suisse First Boston (CSFB) later issued a statement saying they would not issue their recommendation to the government before next week. Following the expiration of the initial negotiation period with Axon Airlines and the receipt of clarifications on their proposals from Cyprus Airways consortium and Integrated Airline Solutions consortium, (CSFB) will provide its recommendation. .. by early next week, it said. The small Axon airline, part-owned by Axon Holdings, had expected to sign a tentative deal with the government early in September. Axon, whose bid of 100 million euros ($88.73 million) for 51 percent of Olympic got a top score of 17 from CSFB, has since improved its offer, privatization sources said. Greece has asked all three bidders to renew their letters of guarantee to October 31 in an effort to keep them involved in the process and to get better offers for a 51-65 percent stake in cash-strapped Olympic. If any kind of deal with Axon is announced, the other two will withdraw, a source among the bidders said. Cyprus Airways, which is working with Alitalia, has asked Greece to clarify where it stands in the negotiations with Axon. It has expressed concern that privatization delays were further hurting Olympic’s dire financial status. We are still interested and will be happy to renew our letter when we are informed on the state of negotiations, a Cyprus Airways source told Reuters. But it now looks like the company won’t be in the buyer’s hands before the second quarter of 2002. CSFB gave the Cypriot airline a score of 14 points and IAS nine. The Australian venture-capital firm said it had informed the advisers it now had a letter from compatriot Qantas Airways expressing interest in cooperating with Olympic if IAS won the tender. IAS sources also said that on Wednesday evening they had submitted to CSFB a higher financial offer and letters from two well-known Greek businessmen expressing interest in participating in the consortium. The Australia group, which is cooperating with Olympic’s pilots, had initially made the best financial offer but its business plan was interpreted as too ambitious. The government, banned by European Union law from subsidizing Olympic, has said the airline must be sold to survive and has made clear a good business plan will weigh more than a high financial offer. We have asked the two (last) bidders to give us some information so that we can evaluate the offers made as a whole, Verelis said. All bidders have said they plan to cut the 8,000 permanent and 3,500 temporary staff by about half. Olympic’s assets are estimated at $275 million and the airline is making annual losses of about $155 million. The applicants are: Sasaki Associates Inc; M. Konstantinidis, president of KEM; the consortium of Libra Holidays Group, Cybarco Ltd, Display Art ltd, Options Cassoulides Ltd, Promo Solution EPE and Ekthesis CMD Ltd; the grouping of BIDC, Top Plan, Ellerbe Becket Ltd, Michaniki, Pennell Kerr Forster, Earls Court & Olympia, SFX Europe, Davis Langdon, Everest, and the law firm of Kyriakides & Giorgopoulos; the consortium of Technical Olympiaki, Mochlos, Porto Carras and Engle Homes; a group headed by London Exhibition Center Ltd; the J&P Development, Avax, J&P Hellas Ate, ETETH, General Lacation, Secil, Athinaion and Asty grouping; Mamidakis and Theoharakis in a joint bid; the consortium of Diekat, PGI Hellas, Stelios Agiostratitis & Associates; the grouping of Tegea, Ellinovalkaniki, Gantzoulas, KEA, McDonald’s Hellas, Global View, Salfo & Associates, Donomis Shipping & Cruises Services, Aria Gefseon, Grafio 75, Comet Meletitiki and Triedros Meletitiki; Aegek, Vioter, Ekter, N. Haragkionis; ExpoCenters Group WS Atkins International Ltd; consortium candidates K.I. Sarantopoulos, Amfitrion Diakopes, Ilias Maniateas Publishing Company; a group currently being set up consisting of Attikat, Agricultural Bank, the Federation of Greek Professional Exhibition and Seminar Organizers, the Federation of Greek Professional Exhibition Organizers, and Hatta; the Everest group; Thessaloniki Trade Fair; Lamda Development, Gek-Terna, Hermes; and lastly RTKL UK Ltd.

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