State To Cover Olympic Airways Debts

The government is willing to meet Olympic Airways’ debts despite the anticipated reaction from the European Union, said Transport Minister Christos Verelis in a recent interview with the Greek daily newspaper Ta Nea.

“We have decided to discuss the matter with the EU and we hope that we can convince them. Besides, it will be the last time this occurs considering Olympic will be sold to the private sector,” he said.

The Greek national carrier has a budget deficit of close to 40 billion drachmas and without the proper management, its financial collapse appears imminent, said the minister.

He said that in order to avoid such an eventuality, the government soon intends to announce the foreign interests who will take over the management of the ailing airline in an effort to secure a majority stakeholder.

Although the government has said it intends to sell off up to 65% of the company, there has been no serious investor interest thus far.

“Olympic faces a very tough six months ahead. However, if it succeeds in overcoming its difficulties and survives, then we can hope for a positive future and a buyer of a majority stake,” Mr. Verelis said. “In order for investors to show interest, Olympic must become like other European carriers. This means that there must be flexibility in terms of staff, and if this requires a reduction then this will occur, either through transfers or voluntary retirement.”

The minister added that Olympic’s transfer to the new Athens airport at Spata will go ahead as scheduled, particularly since the EU increased the funds it will make available for this purpose by around 10 billion drachmas.

In the meantime, Olympic Airways has refused to hand over the amount it owes to the British Airways subsidiary Speedwing after the Greek carrier’s sudden cancellation of the management contract the company had for Olympic.

With this move, the Greek government sent a message to BA, suggesting that it could take the matter of the 900-million drachma debt to court if it wished.

A Greek official stated that discussions aimed at an amicable resolution of the matter had ended and that legal action would follow. He attributed the latest developments to Speedwing.

A BA spokesperson said, on the other hand, that the company had not proceeded with legal action and that it continued to remain in contact with the Greek government in order to find a solution.

BA will reportedly sent a representative to Athens last month in order to further discuss the issue with the Greek side.