NEWS

EU blast at Greece over OA subsidies

Greece broke EU law by failing to take adequate measures for the return of almost 200 million euros in unauthorized subsidies from ailing national carrier Olympic Airways, a top European Court adviser argued yesterday. The main thrust of Advocate General Leendert Geelhoed’s argument was that Greece did not move quickly enough to recover some 194 million euros it had allowed Olympic to accrue in subsidies. He also blasted the Greek government for making it even more unlikely that the money would ever be returned by complicating the situation on December 12, 2003, when it formed Olympic Airlines after merging Olympic Airways, Olympic Aviation and Macedonia Airlines into a single company. Geelhoed proposed that the European Court of Justice «declare that Greece has failed to live up to its obligations under (EU) community law.» The advocate general’s opinions are not binding but are adopted by the court in the vast majority of cases. The court’s decision is expected within the next few months. In 1998, the European Commission approved aid for Olympic under certain conditions, including the stipulation that the government would push through the airline’s restructuring program. However, four years later, the Commission ordered Greece to recover 41 million euros in restructuring aid and 153 million in new operating aid from Olympic Airways. The move came as part of the Commission’s drive to enforce EU directives, which required the reduction in state subsidies to loss-making national enterprises in a bid to ensure fairer market competition. Despite receiving hefty government subsidies over a number of years, by 2001, Olympic had run up debts totaling some 120 million euros. The subsidies were mostly indirect, with the goverment covering both social security contributions and VAT on fuel and spare parts as well as unpaid airport duties. Geelhoed also pointed out that regardless of the switch from Airways to Airlines, Olympic still continued to have a competitive advantage because of the subsidies it had received in the past. Last week, Olympic Airlines posted losses of 23 million euros for 2003.

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