Talks over OA selloff at crossroads

While the bidding process for Olympic Airlines is plodding on, the troubled state carrier is losing money due to an expensive aircraft leasing program and does not have a single plane in reserve. The government will decide by next Thursday or Friday whether to continue talks with one of the bidders for OA, a consortium of two US firms, Olympic Investors and York Capital, or start negotiations with the second bidder, UK investment firm Klesch and Company. The official deadline for the conclusion of talks was yesterday, but the two sides unofficially agreed to continue. According to information obtained by Kathimerini, the stumbling block concerns the financial scheme proposed by the Olympic-York consortium, which is based heavily on debt, both short term, in order to secure adequate working capital, and long term, in the form of a bond, and with company airplanes used as collateral. According to Kathimerini’s sources, the Olympia-York consortium proposes to pay 15 million euros to increase OA’s capital and borrow 90 million euros. It is also said that the consortium has already sounded out other companies over a possible lease-back agreement that would back a 60-million-euro loan. Although it badly wants to rid itself of OA, the government is prepared to end talks with the consortium if it does not receive concrete assurances about the financing of its bid. Klesch and Company has informed the government, in writing, that it is willing to reconsider some of its conditions for bidding for the airline, such as the renegotiation of the contracts between OA and parent company Olympic Airways, which is to remain under state control. OA has been routinely canceling about six to seven flights daily, since a lack of funds has prevented the acquisition of five planes contracted for in January. At present, the company is leasing, on short notice and at considerable expense – over 5 million euros per case, enough to lease four or five planes for a year – planes and crews, often from obscure foreign airlines. OA’s pilots’ and engineers’ unions have denounced the policy as too expensive and leading to loss of market share.

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