ECONOMY

EU could extend OA investigation

European Union regulators could open deeper probes into Olympic Airways after the cash-strapped carrier received a vital loan from a state-controlled bank. The EU already plans an investigation of Greece’s embattled state carrier for possible fiscal improprieties. The 19.5-million-euro ($16.9 million) loan last week by the Commercial Bank of Greece – needed to keep the nearly bankrupt carrier flying – could open new inquiries into possible violations of EU rules that ban state bailouts for airlines. «If public money has been given to the airline, then the (European) Commission will want to look at it,» said Gilles Gantelet, a spokesman for EU Transport Commissioner Loyola de Palacio. As collateral for the loan, the airline put up money owed to it by the government, a bank official, speaking on condition of anonymity, told DowJones Newswires. The official declined to give details. But analysts believe some of Olympic’s financial troubles spring from money owed by the government and state-run entities for the use of services. EU sources have confirmed they would examine former government aid to the airline in the 1990s. A rival carrier has claimed Olympic failed to follow through with conditions, such as accounting controls, imposed in exchange for a special infusion of government aid. If the Commission finds that Olympic broke the rules, it could ask the company to repay the money to the Greek government, a step that could push the carrier toward bankruptcy. The Greek government has said it is hunting for private funds of up to 150 million euros ($130.5 million) to ensure the company’s survival. In a rescue plan announced on Thursday, the government said Olympic will shed 2,000 jobs. The airline will also be divided into smaller companies in an effort to make them more attractive to potential buyers. Olympic’s debt was estimated at 120 million euros ($104 million) last year, but is believed to have grown. It has not published a balance sheet since 1999. (AP)