Olympic Airways slims into Airlines

After several failed efforts to revive Olympic Airways over the past decade, the government yesterday presented legislation creating a smaller, slimmer airline that would be freed of Olympic’s crippling debt, would have half its labor costs and would still carry the six-ring emblem. The government hopes the new company, renamed Olympic Airlines, will attract private investors for at least a 51 percent stake. Olympic had accumulated debts of 512 million euros in 2002. Sources said a group of businesses in the tourism sector is preparing a bid and is looking for partners among big European tourism agencies – specifically, Germany’s TUI, which sends the greatest number of tourists to Greece. National Economy Minister Nikos Christodoulakis and Transport Minister Christos Verelis presented the legislation yesterday, after repeated delays. Parliament will debate the establishment of Olympic Airlines next week. Schedules will be set, staff will be transferred and the new company will exist from the date that the Civil Aviation Authority provides it with a license. Operations will probably begin in two months. «With the establishment of the new company, we safeguard the viability of Olympic Airways and jobs,» Verelis said. «With the solution provided by the government, Olympic’s planes will continue to carry the company’s internationally recognized symbol.» Olympic Airlines will take over Olympic Airways’ flight operations, along with those of OA subsidiaries Olympic Aviation and Macedonian Airlines. The old OA will keep control of ground services as well as cargo and technical services. These will be set up as separate companies which will be privatized. For the next three years, though, the two airlines will sign contracts for Olympic Airways to provide ground services at market rates. Olympic Airlines will employ 1,850 people under new work regulations and will carry an estimated 4.93 million passengers in its first year. (Olympic Airways currently carries about 6 million people annually). The new company’s labor costs will be 45 percent cheaper than present and it will fly to the same destinations, including non-commercial routes to isolated destinations served by Olympic Airways. The rest of about 6,100 employees will stay at Olympic Airways, except for 115 pilots and 322 flight attendants who have chosen early retirement. The share capital of the new company is estimated at 140 million euros, calculated from the company’s assets – including aircraft, real estate and the emblem. This money will be provided by the Greek State through a special fund for the privatization of the Olympic Airways Group. According to the amendment presented to Parliament, this fund will pay the necessary amounts arising from severance pay and other costs and debts during the transition period, «up to the overall cost which corresponds with the book value of the shares of the group’s companies which will go to the Greek State.» The conservative New Democracy party dismissed the proposed legislation. «After spending 3.2 billion euros… on the so-called revival of Olympic Airways, the Simitis government’s only achievement was to bankrupt the company,» spokesman Theodoris Roussopoulos said. The amendment, he said, «merely transfers the problem to the future. It does not provide potential for employees and, most importantly, it says nothing about how much all this will cost.» The Communist Party and Synaspismos Left Coalition criticized the plan for privatization.