Talks over sale of Olympic Airlines headed for failure

Delays in privatization talks with the preferred bidder for Greek flagship carrier Olympic Airlines are raising doubts over whether the sale will go through, a source close to the sale said yesterday. «We had given a deadline for the end of last week to the bidder to submit a final offer. But there has been no major development,» the source told Reuters. «The process is continuing, with developments to date not in the desired direction, but nothing can be ruled out,» the source added. In June, the government picked Olympic Investors-York Capital to continue talks on the airline’s sale. It has not ruled out other bidders. Greece is trying to sell Olympic Airlines as part of a 1.6-billion-euro ($1.93 billion) state divestments agenda to pay down public debt. The carrier remained in the red in 2004 for the second consecutive year after its relaunch, posting a loss of 87 million euros. No one was available for comment at the Transport Ministry. The head of the Federation of Greek Industries (SEV) yesterday appeared gloomy on the airline’s latest privatization attempt. «I think the tender did not bear fruit. There is no interest from investors,» SEV’s chairman Odysseas Kyriakopoulos told reporters. Transport Minister Michalis Liapis has said the sale is the carrier’s last chance for survival. Olympic Airlines is the successor to debt-laden Olympic Airways. Lazard, National Bank, Alpha Finance and Emporiki Investment Bank are advising the government on the sale. The European Commission will apply its «one-time, last-time» rule for state aid to airlines in the case of Olympic Airways, EU Transport Commissioner Jacques Barrot said yesterday. Barrot told a news conference that an EU study on illegal aid to Olympic Airways was still not completed. The Commission launched an investigation in March 2004, saying it had doubts about the Greek plan to set up and privatize the successor airline, Olympic Airlines. It said at the time it wanted to ensure no state aid was involved in the process. «I intend to apply the one-time, last-time rules and… obviously this can’t drag on forever,» Barrot said when asked about the Commission’s view of aid to Olympic Airways. The Commission said at the time of launching the latest investigation that it considered all the companies in the Olympic group to be «a single undertaking» under EU rules, which also prohibit carriers from benefiting from state aid more than once. Earlier this year, the Commission urged Greece to recover 194 million euros in illegal state aid given to Olympic Airways after the European Court of Justice ruled in May that Athens had not done enough to get the money back. The Commission’s demand called into question the survival of Olympic Airlines. (Reuters)

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