The Greek government appears to be in no hurry to present a new strategy for Olympic Airways after talks with a potential buyer collapsed in early February.

The Golden Aviation consortium, led by the Greek shipping group Restis, pulled out of its exclusive negotiations to buy the troubled Greek flag carrier, indicating that it considers its bid over. The breakdown is the third time talks with suitors for Olympic have fallen apart since the government started the privatisation process in late 2000.

Golden Aviation's withdrawal was attributed to an accumulation of demands from the government rather than one sticking point. However, the government sought guarantees on staffing levels and routes to be served. Golden was proposing to operate around 80% of its route network and retain about 2,200 of the 4,000 core Olympic Airways employees. The 3,500 employees in its ground-handling and maintenance operations were to be retained in separate businesses spun off before a takeover.

Options for the government are Aegean Airlines, the second-ranked qualifying bidder; hoping that one of the other bidders that did not qualify can raise the necessary cash; or seeking a new buyer. Meanwhile, it may begin re-structuring Olympic's labour contracts, particularly with its pilots, to make a sale more attractive.

With the Olympic Games to be hosted by Athens in 2004, the government is keen to ensure the airline survives, but with the threat of a Gulf war, it may delay the sale. According to a source close to the process: "The government does not seem to have a burning need to do something in the near term."

Source: Airline Business