ECONOMY

Olympic Airlines warns gov’t of serious operational difficulties

Olympic Airlines (OA) is in a dire situation, facing a shortage of planes and unable to plan for its winter and 2006 summer schedules, according to a confidential document which was dated August 1 and sent by the company to the ministries of Transport and Economy. The danger signal sent by the flag carrier is mainly linked to its still-ongoing fourth privatization attempt, now at the stage of negotiations with interested investors. «The recent attempt at privatizing the company, which began in October 2004, has exceeded the originally planned deadline for completion, which was the end of the first half of 2005. Within the framework of this privatization process, the company has adjusted its policy to the requirements of the privatization consultants and has done everything possible to ease their task. The fact that the process is still under way is exhausting the company’s time limits beyond which it cannot put off making serious decisions,» the document said. OA management said that while the company’s business plan foresees 45 planes, only are 40 available, which means that the addition of five more Boeing 737s via a tender must completed by October. If the government, the sole shareholder, rules out this possibility, the number of pilots will have to be reduced, they said. They also urged attention to the fact that the leasing contract for OA’s Boeing 717 planes expires on March 31, 2006 and that their owners are asking whether the contracts are to be terminated or renewed. A month ago, OA was forced to into a costly, so-called wet lease agreement, paying for planes at hourly rates, and naturally suffering a blow to its reputation when passengers discovered they were flying with virtually unknown operators. Management also said in the letter that matters are further complicated by the uncertainty as to whether the term contracts of 260 flight attendants will be converted into open-ended ones.