IAS bid for Olympic collapses

The fate of the bidding process for ailing state airline Olympic Airways was effectively sealed on Saturday when Transport and Communications Minister Christos Verelis announced he would not extend a deadline for the sole bidder to provide financial guarantees. The bidder, the International Airline Solutions (IAS) consortium, failed to abide by a final Friday deadline to put 102 million euros into an escrow fund. «No extension will be given… The time period offered to the consortium expired (on Friday),» Verelis told reporters. He added that the government will announce «how the privatization process will unfold» this week. The collapse of the IAS bid does not signal the end of the government’s effort to sell Olympic. It is, nonetheless, a setback because the government, eager to get rid of Olympic, let the bidding process drag on too long even when it became apparent, early on, that most of the bidders were either unknown entities or lightweights. The one bidder who appeared more likely to acquire Olympic, Cyprus Airways, pulled out during the fall. An even more unlikely candidate, given its relative size, was private Greek airline Axon. It was assessed, nonetheless, by government advisers Credit Suisse First Boston (CSFB) to be the frontrunner. Axon owner Thomas Liakounakos, a prominent supplier of arms to the Greek military, was said to be pressuring the government to conclude bid talks by early October. Fortunately, the government did not do so, given the fact that Axon Airlines suspended its operations on November 30. IAS was a strange case from the start. Originally an Australian company providing «air services» but running no airlines, it had the steady backing of Olympic’s pilots’ union, who were partners in the consortium. Other than them, however, the IAS consortium was a revolving door of participants, including, at various stages: businessman Constantinos Angelopoulos, son of late steel magnate Panayiotis, who joined through a shipping subsidiary; Pavlos Vardinoyiannis, son of late family head Nikos, bidding through a Luxembourg-registered company; Greek-American businessman Spyros Papageorgiou; Dimitris Fessas, a businessman from northern Greece, known primarily as a tobacco exporter; US group Haliburton; advisers Brown and Root; and Australian airline Qantas. In the end, only Vardinoyiannis – by now, owner of a 90-percent stake in the consortium – and the pilots’ union were left. IAS representatives, who, as late as in the middle week, were boldly asserting they would expand Olympic’s operations by 35 percent, were nowhere to be found on Friday, or during the weekend. The government is expected to try again to sell Olympic. The company, however, is heavily indebted and the European Union will not permit any infusion of state money. Olympic’s losses for 2001 are expected to amount to 75 billion drachmas (220 million euros). Olympic officials told the Athens News Agency yesterday that they were beginning to turn the company around after cutting some non-profitable routes and laying off 600 of its 9,000 employees. Still, Olympic has suffered too much from years of mismanagement, due in no small part to the influence of headstrong unions, to be able to turn a profit anytime soon. In fact, the only time it has done so since 1977 was 1995. The then executive in charge, Rigas Doganis, was sacked in February 1996 because he was not popular with the unionists.

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