New round of talks on sale of Olympic Airways starts today

Credit Suisse First Boston (CSFB), the government’s adviser on the privatization of state airline Olympic Airways, will start a new, 35-day round of negotiations today with one of the three bidders, private Greek airline Axon. Axon’s bid was evaluated as the best by CSFB. Since then, however, rival bidders Integrated Airline Solutions (IAS) of Australia, and Cyprus Airways, have improved their offers and brought new partners into their respective consortia. Axon’s rivals are worried that the bidding procedure is less than entirely transparent and that the government is favoring Axon. IAS, which has renewed its letter of guarantee, as requested, to October 31, is having second thoughts about legitimizing the process and is considering revoking the letter. Cyprus Airways has officially declared it is still interested in Olympic if the price is right. However, it has not renewed its letter of guarantee, which expired on August 31. Axon Airlines has been pressing the government to sign a preliminary agreement, an act that would consolidate its position as the leading bidder for Olympic Airways. Although nothing has been officially confirmed, sources say that there already exists an initial agreement between the government and Axon which will not be made public. Other sources, however, declare that this agreement was never signed because of a disagreement between National Economy and Finance Minister Yiannos Papantoniou and Transport Minister Christos Verelis. According to information, CSFB has asked for a three-month extension to its one-year contract, which expired yesterday. One year on, the adviser’s fees and the extra success fee, in case a buyer for Olympic is found, remain shrouded in mystery.

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