State to present blueprint that transforms Olympic Airlines into Pantheon Airways

The government will soon present a plan to restructure and privatize ailing national carrier Olympic Airlines (OA), Transport Minister Michalis Liapis said yesterday. «We are working to establish a new company that will operate on commercial principles and have private management,» Liapis told reporters after meeting with Prime Minister Costas Karamanlis. His statement followed a report in Kathimerini on Sunday that the new carrier is to be a stripped-down version of Olympic and will begin operations in October under the name Pantheon Airways. The new carrier will be based on private capital and provide flight services only (excluding technical support, ground handling and training). It is hoped to take off on October 26 this year. According to sources, Pantheon will begin with 33 leased aircraft (OA has 40 today); will fly to 92 destinations (as opposed to OA’s 118) and flights will be less frequent, thus giving the advantage in the domestic market to OA’s main competitor, Aegean Airlines, recently affiliated with German flag-carrier Lufthansa. The new company will have a staff of 2,162 who will be hired on individual contracts from the open market rather than be transferred from OA (which numbers 6,200 permanent and seasonal staff). These are the key points of the four-year business plan (2007-2010) by Sabre Airline Consulting for Pantheon Airways which is already in the hands of EU Transport Commissioner Jacques Barrot. Looking for funds The plan seeks investors on the basis of «market opportunity» stemming from the liquidation of the companies belonging to the OA group and therefore the vacuum created in the main air link with other countries as well as within Greece. The plan has been based on market estimates and is totally distanced from OA’s burdened past. The new company will need a 200-million-euro capital investment, with the largest stake and the management going to private investors, while the state is to maintain the role of a passive minority stakeholder which will not intervene. Pantheon will make some noise in the domestic market, as it is expected to earn 31 percent of flight revenues in 2007 and 22 percent in 2010. The European market will be the main engine of the company (47 percent) and the target will be intercontinental destinations (15 percent in 2007 and 30 percent in 2010). Among the foreign destinations to be abandoned will be Munich, but by 2010 new destinations are to be added, such as Beijing, New Delhi, Tunis, Tripoli, Manchester, Chicago, Milan (both airports) and Zurich. On paper Pantheon will carry 5.8 million passengers next year, have revenues of 588 million euros and enjoy a marginal gross profit of 7.3 million euros. In 2010, it is hoped company revenues will rise to 869 million euros after carrying 6.9 million passengers, with a gross profit of 56.4 million euros. The airline’s staff will not exceed 2,800 people by 2010, costing the company 135 million euros. The plan’s outline points toward outsourcing contracts for all airline activities apart from flying. Current OA staff that do not qualify for early retirement are to be let go before the OA liquidation. The Pantheon business plan requires the approval of the European Commission, which is examining in depth the possibility of illegal state subsidies, given that the first stakeholder is the Greek state, which is to invest 70 million euros as founding capital. The Brussels test It will be hard to convince Brussels due to the airline’s burdened past of EU law violations from repeated illegal state cash injections until 2003 and five failed previous efforts to privatize Olympic Airways and its successor Olympic Airlines. The government, through Deputy Finance Minister Petros Doukas, stated last week in Brussels that it is seeking investors for Pantheon and that within two weeks it will have drawn up a list of interested parties considered to be reliable and financially strong. It will soon be clear whether Pantheon as it is on paper constitutes any attraction for investment, from either Greek shipping tycoons, foreign equity funds or for consortiums of entrepreneurs who can now look beyond OA’s six circles, its assets and the heavy debts and fines. Nevertheless OA unions have already revolted against the plan. The head of the Federation of Civil Aviation Unions (OSPA), Manolis Patestos, said this all sounded like a bad joke and warned of industrial action.