Final Olympic effort

The collapse of the bid for a majority stake in troubled airline Olympic Airways underscores the difficulties the government is facing trying to sell off loss-making state companies. Another privatization, that of Hellenic Shipyards, which had been far more advanced is also being questioned. Furthermore, Greece is coming under increasing international scrutiny over the implementation of privatizations. The failure of the Integrated Airline Solutions consortium, the sole remaining bidder for Olympic, to come up with the 102 million euros required as a guarantee of its solvency, has left the government saddled with a loss-making company (at least 180 million euros and rising), with excess staff of about 9,000, dominated by headstrong unions used to having it their own way, and no further room for state funding. Indeed, according to sources, the European Union is going to take a close look at Olympic’s finances to determine whether it has received state aid, which the Commission has banned since 1998. EU officials have long felt that Olympic, which has survived in a climate that has seen the demise of apparently healthier operations, such as Swissair and Sabena, needs extensive restructuring. The government also appears inclined to adopt this view, while rejecting calls, mostly from market analysts, to shut the whole operation down and begin anew. «Olympic will continue to fly. We will take all the necessary measures so that it doesn’t burden the Greek people, and our orientation remains firmly in favor of privatization,» government spokesman Christos Protopappas said yesterday. Transport Minister Christos Verelis also pledged that Olympic would continue its operations. Today, Verelis and Economy and Finance Minister Nikos Christodoulakis will brief Prime Minister Costas Simitis on the situation. The inner Cabinet will discuss the issue on Thursday. It is likely Olympic will be split into at least two parts, one consolidating flight operations and the other comprising Olympic Catering, ground and technical operations. Private financing for the restructuring plan will be sought. It may be possible to sell individual parts. Opposition New Democracy accused the government of squandering 1 trillion drachmas (about 3 billion euros) in misguided attempts to keep the company afloat and demanded a new, international and «transparent» bidding process. Visiting officials from the Organization of Economic Cooperation and Development (OECD) have also been inquiring about the government’s intentions regarding the privatization of Olympic and Hellenic Shipyards, as well as the further deregulation of markets and social security reform.

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