ECONOMY

Slow death for Olympic

On September 11, 2005, in his annual speech at the Thessaloniki International Fair (TIF), Prime Minister Costas Karamanlis had said that Olympic Airlines could not continue operating under the same regime, that is, as a state-controlled airline. A few days later, the EU ruled that both the old Olympic Airways, which handles ground operations, and Olympic Airlines, which handles flights, had received illegal state subsidies of 700 million euros, which they ought to return. A year later, and despite the frantic initial reaction, nothing has happened. Both companies have increased their debts and cannot agree on how these debts are to be split. Nominally, the government has retreated from its option to liquidate the companies, although this option is very much alive: the special legislation protecting Olympic Airways and Olympic Airlines from «sudden death,» that is, prohibiting creditors from obtaining court orders to claim the money they are owed, expires on October 28. The government will most likely extend the legislation, as it is still mired in negotiations with the European Commission about the airline’s future. The government hopes that the solution found can prevent the «cannibalization» of the companies’ assets and will leave room for a final attempt at privatization. So far, EU officials disagree with the government’s proposal to place the companies under a special restructuring regime that would protect them from their creditors. In a desperate move, Olympic Airways has taken legal action for money allegedly owed it by the state for various services and for the transfer of its operations to the new Athens airport in 2001. The amount claimed exceeds that claimed by the EU as illegal subsidies. Olympic’s legal team hopes that it can offset a part of the fine against those claims.