GERALD BUTT / NICOSIA AND GUY VLASSIS / ATHENS
Axon's collapse and Olympic's stalled privatisation pave the way for venture
Cyprus Airways has turned down an invitation from the Greek government to open talks for the acquisition of Olympic Airways and has instead unveiled plans to set up a new airline in the country.
Athens approached the Cypriot carrier after talks with the preferred bidder for the takeover of state-owned Olympic, Athens-based Axon Airlines, ended as the indebted Axon suspended operations. Cyprus Airways was named last summer as the second preferred bidder for the ailing Greek national airline.
The government is also talking to a consortium led by Australian company IASC (Flight International, 4-10 December).
Delays in the privatisation process and the turbulent air travel market contributed to the Cypriot carrier's rejection of the Greek government's request. "We could not hold on to our original proposal, which was based on certain assumptions that were relevant at that time," says Cyprus Airways chairman Haris Loizides.
The Cypriot airline presented its proposals ahead of the sharp deterioration in the aviation market caused by the 11 September terrorist attacks on the USA.
"We have already started some preparations for setting up a small company of our own in Greece and we might get into discussions with a private company there," Loizides says. The new company would initially need at least four or five aircraft and would focus on international routes, he says. "In terms of market share and slots there is a very good opportunity. The fact that Axon is out leaves room for a small airline," adds Loizides.
Greek carrier Axon ceased operations on 3 December as the decline in business since early September added to its debts. The Greek aviation authorities impounded an Axon-leased Boeing 737-400 at Sparta airport, following a claim for 500 million drachmas ($1.3 million) owed to Axon's handling agent Swissport. The aircraft was later released after Axon gave Swissport payment guarantees, but the Greek aviation authorities are expected to withdraw Axon's operator's certificate within days.
According to the government's advisors, investment bank Credit Suisse First Boston, Axon refused to provide adequate financing commitments in mid-November and the government then turned to a rival bid from IASC.
Axon has protected some of its fleet through a Cyprus-registered holding company, Murloch Enterprises, from which it has leased back its three Embraer ERJ-145s, thus securing the aircraft against possible claims from its creditors. The four 737s Axon had leased will be returned to their owners.
Axon was founded in 1998 by the Greek tycoon Thomas Liakounakos, whose business interests include publishing and armaments.
Source: Flight International
