Greece said it would shut down ailing state carrier Olympic Airlines and relaunch it under a new structure, ending years of failed efforts to find a buyer, under a plan that received the blessing of the European Commission.
Greece's conservative government had pledged to either find a buyer or re-establish the loss-making airline as a new entity by the end of 2008.
(The new) company will keep the name, the symbols of Olympic, and it creates the conditions for dynamic growth of Olympic in the future.
Some 8,000 employees are expected to lose their jobs.
The European Commission found that a plan submitted by the Greek authorities whereby certain assets of Olympic Airlines and Olympic Airways Services will be privatised in bundled form does not involve any State aid provided that the undertakings given by the Greek authorities are fully complied with. Thus Greece has received the green light from the European Commission to proceed with the privatisation. This decision follows a separate but related decision taken by the Commission to partially close the formal State aid investigation procedure it opened on 19 December 2007concerning State aid granted by Greece to Olympic Airways and Olympic Airlines. The Commission has concluded that since its last decision in September 2005 concerning the Greek flag-carrier Olympic Airways Services and Olympic Airlines have received further State aid estimated at more than EUR 850 million. This Commission decision finds that this aid is incompatible with community law.
Today's two decisions concern Olympic Airways Services and Olympic Airlines, two State-owned chronically indebted air transport companies active in the air transport sector which have been the subject of several negative Commission decisions in recent years.
Having carried out an in-depth study of the finances of Olympic Airways Services and of Olympic Airlines the Commission has found that since 2005 Greece has granted illegal and incompatible State aid.
As the part of the investigation into the payment by the State to Olympic Airways Services in "damages" following a series of arbitral panel awards requires further detailed investigation this part of the investigation remains open and has not been concluded today.
In a separate but related decision the Commission has decided to approve plans by the Greek authorities to privatise certain assets of Olympic Airlines and of Olympic Airways Services in bundled form. In doing so the Commission has declared that the privatisation process as submitted by Greece will not amount to State aid. The privatisation process will result in three entities: one a flight company taking over 65% of the capacity of Olympic Airlines as well as the possibility to use the Olympic Airways brand and logo; and two further companies dealing respectively with ground-handling and maintenance. The remaining parts of Olympic Airlines and of Olympic Airways Services will be liquidated.
In reaching this conclusion the Commission found that the notified sale processes are in effect no different to any other type of sale of assets on market terms, taking into consideration the specific circumstances of the case and having regard to the specifics of the aviation sector, regulatory constraints and those of the Greek market with its particular geography.
In this way, a solution similar to the liquidation of Sabena and the creation of what is now Brussels Airlines has been developed.
The privatisation process will be overseen by an independent monitoring trustee who will ensure compliance with the decision and the commitments given. The monitoring trustee will submit regular reports to the Commission regarding progress on the privatisation process and the steps taken; if the Commission is unhappy with any aspects of the procedure followed it can reopen the case.
The Commission notes also that while Olympic Airlines and Olympic Airways Services will be liquidated post-privatisation, the new companies will develop their business activities based on the business plan of the new owners in accordance with market conditions. The Commission notes also that all public service obligations concerning essential life-line air services to the Greek islands are assured.
