NEWS

Commission to probe Olympic restructuring

The European Commission yesterday decided to initiate a formal investigation into whether Greece gave state aid to Olympic Airways as it tried to free it of debt before setting up a new company, Olympic Airlines, which it aims to privatize. The commissioner for transport and energy, Loyola de Palacio, said Olympic should either be sold or go into liquidation. The probe could lead to Greece being sent to the European Court. «It is high time to take action: This is the last chance for Olympic Airways. Unless the privatization process is completed in full conformity with European legislation, the company will have to be placed into liquidation, as was the case with other companies in the competitive air transport market,» she said. «I am certain that the Greek government will cooperate fully with the Commission to avoid the errors which led to this situation,» she added. Transport Minister Michalis Liapis said, «We will respect the Commission’s decision but we will make every effort possible to save Olympic Airlines.» Liapis and Economy Minister Giorgos Alogoskoufis will seek a briefing from the privatization advisers, ETEBA, Emporiki and Alpha. If the current candidates do not meet the necessary credibility criteria, the New Democracy government will immediately announce a new tender. Former Transport Minister Christos Verelis said everything had been above board and the probe resulted from a complaint by competitor Aegean Airlines. In its decision, the Commission said that «it has doubts as to whether several measures in recent years may be regarded as compatible with the common market. The Commission will assess whether the advantages granted to Olympic Airways constitute new state aid, and in particular the non-payment of tax debt in 2003; the provision of an advance by the Greek State to fund the restructuring and privatization of the company and the non-payment of the airport modernization tax (Spatosimo) charged to passengers.» The non-payment of tax is estimated to have saved Olympic over 150 million euros, and the Spatosimo some 26 million. The Commission also wants to investigate the conditions under which Greece set up Olympic Airlines in Dec. 2003 to undertake aviation activities. The Commission, though, said: «All the companies which belong to the group are a single undertaking from the point of view of the Community state aid rules. All the assets of Olympic Airways (airplanes, staff), and in future the maintenance and ground-handling divisions have been or will be transferred to the new company. It has also taken over the slots, traffic rights and public service obligations of Olympic Airways. Accordingly, the Commission has doubts about the lawfulness of the advantages that Olympic Airlines, as the successor to Olympic Airways, may enjoy, and about the procedure used which does not allow it to assess whether the potential purchaser will pay a fair price.»