Government may bite the OA bullet
A new round of bidding for troubled carrier Olympic Airlines will be invited tomorrow and the previous privatization process, which has proved fruitless so far, will be brought to a halt, a government source has told Kathimerini. The return of Economy and Finance Minister Giorgos Alogoskoufis from the US will signal the beginning of another episode in a serial that has proved problematic for successive governments over several years. Despite the proposed move to instigate a new round of bidding for the company, the mood in the government is hardly optimistic. The poor state of the domestic and international air transport markets are a cause for concern. The government’s main fear is that a reliable buyer who has the financial clout and willpower to see the purchase through will not be found. This will leave the ruling conservatives facing the unsavory prospect of having to bring Olympic’s operations to an end, precipitating the redundancies that will accompany such a decision. A look at the airline’s recent history suggests that, as unpalatable as it may be, this might be the only option left. It is estimated that Olympic has absorbed almost 9 billion euros (3 trillion drachmas) of public money in the last 20 years. To make matters worse, the recently reformed Olympic Airlines, shorn of its previous debts, is losing money again. After two failed attempts at privatizing the old carrier Olympic Airways (OA), which owed over 500 million euros, its debt-free arm was put forward in the guise of Olympic Airlines. The trouble is, the new company is likely to post losses that could exceed 100 million euros. Even if the government wanted to pump more money into the flagging airline, on no account would the European Union allow it under its competition rules. OA is still under the threat of a possible European Commission ruling that will force it to return to the government more than 180 million euros it received as grants, on the grounds that this violated the rules of the deregulated air transport market. Bearing all this in mind, it seems likely that the government may face a tough choice on how to solve a dilemma that has haunted the Greek State for decades.
