A new air carrier will be carved out of Olympic Airlines (OA) with the help of private investors, the government said yesterday, after the fifth attempt to privatize the troubled company failed. Finance Minister Giorgos Alogoskoufis and Transport Minister Michalis Liapis said that a new airline will be formed out of OA and that the state will hand over ownership and control to private investors. «We will submit in the next few days a legislative amendment that will set up a new airline to operate under private financial criteria,» Liapis said after a joint ministerial meeting. The fifth attempt to sell state-owned OA since 1999 took a hit recently when the European Commission ordered the airline to pay back more than 500 million euros in illegal state aid it had received. An American consortium comprising Olympic Investors and its US partner had already been chosen as the preferred bidder in the privatization process. But the EU decision made sale talks a lot more difficult, Liapis said. «We have also instructed a top international consultant to draw up a business plan, for which the new company will receive the necessary permits,» the minister added. The new airline is likely to start operating in April with 30 planes – 10 fewer than it currently has. The decision is seen as a compromise for the government, which had indicated that it was ready to shut down the airline as part of its structural reforms. However, a slimmer version of OA with fewer employees and lower costs will now keep the airline flying and help the ruling conservatives minimize any political backlash. Liapis is expected to meet with OA employees tomorrow to discuss their future. The Federation of Civil Aviation Unions (OSPA) welcomed the news yesterday but said it was cautious about whether the state will use this development as another opportunity to scale the air carrier down further.