Pericles Panagopoulos, the risk-taker, stays afloat by expanding abroad
Pericles Panagopoulos, president of the Attica Enterprises (EPATT) group is upbeat about the future of Greek coastal shipping, although the group’s SuperFast Ferries and Blue Star Ferries were the only companies in the sector that posted profits last year. In an interview with Kathimerini, he says many adverse factors affected coastal shipping in 2001, such as the price of oil and the September 11 attacks in the USA, but in particular the fall in fares as a result of the sharp competition on the Adriatic routes – due to excess capacity. Panagopoulos is in favor of a merger of Blue Star Ferries and ANEK Cretan Lines; he says the group’s expansion on northern European routes is going well and does not rule out future partnerships within or outside Greece. Mr Panagopoulos, you were one of the first to ply the Adriatic routes and despite gloomy forecasts by many, you succeeded. Now you are pioneering the entry of Greek ferries into other markets, such as the Baltic and the Scotland-Belgium route. Do you feel vindicated by the results so far? Indeed, when we ordered the two SuperFast ferries in 1993, someone said Panagopoulos will not be able to repay even the interest on the loans. Now, as everyone knows, their success in the Adriatic has been unique. We started operating the Finland route 10 months ago and now have two vessels, which are operating successfully despite the difficulties and the tough competition. On the Sweden route we began operations about two months ago and it is too early to say. As regards Scotland, where we will begin mid-May, we shall be able to say positively a year from now. It is, nevertheless, a fact that our hard efforts, particularly as regards innovative moves, are not always correctly assessed by investors because they are watching us from a distance. Are you planning expansion to any other markets, either autonomously or in cooperation with a foreign company? I will use a metaphor. While having a meal, we usually discuss what to have next but we must first swallow what’s already on the table. Your profits for 2001 were down from 2000. Why was this and do you believe that coastal shipping will return to increasing rates of profit growth? The group’s two companies, that is, Strintzis Lines and EPATT – representing Superfast and Blue Star Ferries – were the only ones to post profits in the sector. This shows it was a very difficult year, for a variety of reasons. First, there was the livestock epidemic scare, which affected the meat trade early last year. There were also oil prices and the September 11 attacks in the USA. Above all, however, profitability was affected by the illogical, I would say, drop in fares – the result of very stiff competition on the Adriatic routes due to the oversupply of vessels and capacity. This points to a need to join forces, to have a different approach to problems, be they overcapacity or anything else. As you will have heard, Strintzis is currently in talks with ANEK for a possible merger, which I am very much in favor of. We have seen many coastal shipping companies taking out loans in order to implement investment programs. As you said, however, the global economic situation, combined with the stagnation in the Aegean and Adriatic routes, has resulted in many operators’ inability to repay the loans, and in the banks exercising pressure for mergers or partnerships in order to secure their money. What is your view? Can such pressure be effective and are companies ready for partnerships? I think there will always be pressure when a company cannot meet its obligations. But I would like to note something else; in Greece, when there is reference to strategic foreign investors, the prevailing perception, unfortunately, is of a «dumb» foreigner who will give us his nice money without expecting much in return. But there is no «dumb» foreigner. We ought to revise this misconception. Foreign investors expect much in return and in earnest, and for this reason we must be very careful and guarded about how we deal with them. If the Strintzis Lines-ANEK merger – which you support – goes through, this will mean a much bigger company which will control smaller ones, such as NEL and DANE, creating again some form of a monopoly on some Aegean routes. Could this, in your view, cause the Competition Commission to intervene? I think it is too early to say. We don’t know how the present collaboration of Strintzis and ANEK will develop in future. We must first arrive at a point where there are signs of a monopoly, which I consider do not exist. Hellas Flying Dolphins already controls a large segment of the Aegean routes and is a big competitor. Do you consider that the conditions within the new legal operating framework make your investing in the Aegean market worthwhile? I think the present merchant marine minister, Giorgos Anomeritis, who hails from the Cycladic islands, has realized, and is well aware of, what is required for the new law deregulating the industry to be applied properly. I believe that cooperation between all the sides involved will bring very positive results for Greece, its economy and coastal shipping. Are you not apprehensive of the excess capacity on some routes, for instance to the Dodecanese? Will this not cause financial problems to some operators who may be forced to reduce fares or increase costs in order to improve services? The free market is what it is. If 12 companies wish to operate on a particular route, nobody can stop them. Free-market rules, supply and demand will then determine who stays, who goes, who makes money. Profit is necessary for a company to continue operating and improving services.
