OA seriously lacking cash and planes

Greece’s national carrier, Olympic Airlines (OA), is getting increasingly short of planes and cash, leading to serious problems in its flight program in peak season. From 42 planes available at the end of 2007, OA found itself with only 36 at the end of May, after the expiry of several aircraft leases. It has since added two Boeings to the fleet and is expecting to deploy one more by August 18, according to the company’s optimistic scenario. The airline seems to have suffered a considerable financial impact from the go-slow by pilots of its propeller-powered aircraft on domestic routes for 20 days in May, when it says that it incurred a loss of 2.1 million euros in revenue. The go-slow had caused the cancellation of hundreds of flights. Moreover, OA had to pay about 900,000 euros in compensation to passengers affected by the cancellations. The resumption of the go-slow in June cost more than 1.2 million euros. As a result, the carrier is now unable to meet payments owing to creditors and staff. Employees are receiving their basic salaries but holiday bonuses will not be paid until the end of August. Management sources say the company will have to resort to borrowing to meet the lack of liquidity.