ECONOMY

EU opens new probe into Olympic state aid

The European Union opened a new investigation into Greek government support to Olympic Airlines SA, saying extra aid may have violated EU competition rules. «Further aid may have been granted,» EU Transport Commissioner Jacques Barrot said today in a statement issued in Brussels. «We have no choice but to open a formal investigation.» The move follows complaints by rival airlines. The Commission suspects that Greece has failed to recoup Olympic’s tax and social security debts since December 2004, the statement said. The government may also have been financing some of the state-run company’s aircraft leases since May 2005. A 2006 arbitration decision awarding Olympic about -800 million of state compensation «may involve overcompensation» and will also be probed, the Commission, the European Union’s executive arm, said. The EU has already ordered Greece to recoup at least -130 million in illegal state aid the company received before 2004. Greece has still failed to enforce that decision, the Commission said last month. Olympic isn’t allowed to receive any state support because Olympic Airways, its predecessor, was approved one-time aid in the 1990s. Greece argues that the legal wrangle is hampering efforts to find a buyer and save the money-losing airline. Olympic was founded by late shipowner Aristotle Onassis in 1957 and taken over by the government in the 1970s. «Today’s decision deepens the legal quagmire,» Transport Minister Costis Hatzidakis said yesterday in a speech in Parliament in Athens. Hatzidakis has said he’s speaking with the Commission about closing and reopening the airline, free from its estimated debts of -2.5 billion. The company would keep its name, airport slots and logo of six interlocking rings. «Olympic’s rings will continue to fly, we’re emotionally attached to them,» Hatzidakis said yesterday. The Commission is under pressure to act on Olympic from Ryanair Holdings Plc, Europe’s biggest discount airline. Ryanair has lodged complaints against the EU’s executive regarding illegal state subsidies to four carriers, including the Greek company. Olympic is the larger of Greece’s two airlines. Its workers oppose a sale to investors and are threatening to disrupt air traffic across the country if the company is shut down over its debt.