Airlines may join forces in Greek skies

Aegean Airlines took the market by surprise yesterday when it announced it is in talks with rival Olympic Air on a possible deal that could lead to a larger player taking charge of the Greek skies but also raises a number of issues relating to competition. In a filing with the Athens bourse, Aegean Airlines said that the main shareholders of the two companies are in talks «for possible cooperation,» adding that there is nothing specific yet to announce. It is not clear whether talks are aimed at a possible merger between the two firms, which jointly control 95 percent of the Greek air travel market, or some form of strategic cooperation. Shares in Aegean moved sharply higher on the news, gaining 3.51 percent to 4.13 euros, outperforming a 0.03 percent dip on the broader Athens market. Shares in Marfin Investment Group (MIG), which owns Olympic Air, advanced 0.54 percent to 1.86 euros, paring earlier gains of around 4 percent. Brokers agreed that the move would be in the interests of Aegean Airlines, facing intense competition from recently privatized OA, but noted that there are a number of competition issues are raised. «Although mergers of this kind have been allowed in the past in other EU members, we should wait and see as air transportation has been a politically sensitive issue in the past,» Piraeus Securities said in a note.

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