Gov’t still trying to save Olympic from liquidation

The government has submitted new, supplementary data to the European Commission in support of its application for Olympic Airways to come under Article 44 of Law 1892 of 1990, which absolves debtors of any liabilities with the approval of creditors. In a letter to Transport Commissioner Jacques Barrot last week, the government asked the Commission to approve a urgent plan for saving the carrier from liquidation, so that it may be privatized and return state subsidies to the tune of 700 million euros which Brussels has ruled illegal. Last April, Athens asked the Commission to consent to a plan for the financial rehabilitation of both Olympic Airlines and its predecessor, Olympic Airways, which retained non-flying activities and the carrier’s huge debt. It proposed that both companies come under Article 44, which is possible with the consent of creditors accounting for at least 60 percent of liabilities, including 40 percent of all mortgaged assets. Athens football club AEK made use of the provision last year. The initial reaction of Commission officials in April was negative. The Greek government has responded by arguing that an arrangement under Article 44 is compatible with Community legislation and is in fact the only feasible one, contesting instructions for the carrier’s liquidation. The Commission’s response is expected by the middle of this month. According to sources, the Greek government is also seeking a meeting with Barrot before that. An outright rejection of the Greek proposal would effectively annul any effort to privatize Olympic or any of its parts. Its liquidation would then be a matter of time, depending on political factors, particularly the timing of the next election. But if Brussels approves yet one more salvation plan for the carrier, the government will find it will need to deal with accumulated debts of 1.5 billion euros of both companies over 30 years. The state is Olympic’s largest creditor, followed by fuel companies, banks (short-term loans) and Athens International Airport (AIA). Olympic Airlines is AIA’s biggest customer, accounting for about 45 percent of its revenue. As a result, the continuing uncertainty regarding the future of the airline is seen as a break to AIA’s planned listing on the Athens bourse, as it affects its valuation.