EU to refer Greece to European Court over Olympic aid

BRUSSELS – The European Commission will refer Greece to court this week for not complying with a 2005 order to recover hundreds of millions of euros in state aid and taxes from Olympic Airways, a Commission official said. The move would be the second involving court action over Greece’s loss-making airline by the European Union executive in a matter of weeks. Transport Commissioner Jacques Barrot said in September 2005 the Greek government must recover as much as 540 million euros ($668.5 million) in state aid and unpaid taxes from Olympic Airways and its successor, Olympic Airlines. «Mr Barrot will propose to refer Greece to the court for non-execution of the September 2005 decision,» the official said yesterday, on condition of anonymity. «The Commission is expected to refer Greece to the court.» The decision, expected at a Commission meeting tomorrow, puts further pressure on Greece to sort out the problems with its airline, once owned by the late tycoon Aristotle Onassis. EU rules prevent an airline from benefiting from state aid more than once. The Commission aims to enforce those rules to create a level playing field among carriers throughout the 25-nation bloc. Last year the Commission approved a restructuring plan for Italy’s Alitalia, despite protests from European airlines like Lufthansa and British Airways. The Commission ruled the plan did not involve state aid. The spat between Greece and the EU over Olympic has dragged on for years. Earlier this month the EU executive sent Greece a «reasoned opinion,» warning it to recover 161 million euros in illegal state aid granted to Olympic from 1998 to 2002 or face action at the European Court of Justice and potentially hefty fines. The September 2005 decision was separate, relating to state aid and taxes after 2002. A court case on that ruling would not lead to fines but the official said Brussels was preparing for the stage when fines would be requested in relation to that decision. «We’re not happy with the situation,» he said. The amount of money that had to be recovered in relation to the post-2002 period remained unclear, he added. The September decision highlighted more than 350 million euros in tax and social security liabilities due in addition to unlawful aid including 40 million euros for aircraft leasing. The large amounts of money have led to uncertainty over the carrier’s future – a future its competitors hope is short. Adding to the uncertainty, the airline’s chairman resigned last week. Greece is trying to privatize Olympic. The government envisions a smaller successor airline about one-third of Olympic’s size. But a spokesman for Barrot said Greece had still not submitted a relaunch plan. Barrot had told reporters in March he expected a plan by the end of that month.

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