Greek carrier Aegean Airlines has agreed to buy rival Olympic Air from Marfin Investment Group for 72 mln euros in a bid to bolster its position during the country's economic crisis, it said on Monday.
The brand names and logos of the two companies will be maintained, Aegean said, adding that payment for the acquisition to Marfin will take place in installments.
Greece's economy is in its fifth year of recession as a result of austerity measures to deal with the debt crisis. The airlines tried to merge in 2010 but the European Commission blocked the deal on competition grounds.
Aegean, which has a market value of about 121 mln euros ($158 mln), saw its shares rise 1.2% in light volume. Former state carrier Olympic Air was bought by MIG after being privatised in 2009 and is not listed. Both airlines posted losses in 2011.
"Their combined market share has been reduced because of the deep recession and new entrants in the market such as Cyprus Airways," a source said.
The EU blocked the merger of Olympic and Aegean in January 2011 on grounds that the combined Greek carrier would have a quasi-monopoly in the domestic air market.
The carriers offered to cede take-off and landing slots in Greece, but the Commission ruled this was not enough as Greek airports did not suffer from the levels of congestion affecting others in Europe.
Olympic and Aegean rejected suggestions of giving up part of their fleet or one of their two brand names to new entrants.
Olympic, founded in 1957 by the late shipping magnate Aristotle Onassis, fell into steady decline after being operated poorly for many decades by the Greek government and burdened the state budget with losses.
Before the previous merger attempt, Aegean offered 170 mln euros to buy the debt-ridden state carrier when it was put it on the block, but lost out to MIG.
Aegean has a young fleet of Airbus aircraft and flies more international routes than Olympic.
Greece is also seeing a wave of consolidation in its banking sector, with a flurry of deals as banks tie up to cope with the crisis. MIG is a major shareholder in banks in Greece and Cyprus, property and the health sector.
Get all the latest news and videos in your inbox. Register FREE