The Greek prime minister Costas Simitis has given the two ministers responsible for Olympic Airlines' future two months to save the flag carrier from bankruptcy. The carrier needs at least 720 billion drachmas ($1.85 billion) to survive.
Political sources say the prime minister told the transportation and finance ministers that unless they find enough private investors by the end of January, the government will be forced to declare the airline bankrupt.
Government consultants say the airline needs at least 400 billion drachmas in private investment to clear debts, and more could be needed as privatisation progresses and "hidden" debts are uncovered.
The state will also be asked to contribute a further 300 billion drachmas paying taxes, national insurance, and airport taxes before Olympic's assets are transferred to the private sector. Moving the airline's base from Hellinikon airport to Spata airport will require an additional 20 billion drachmas.
The government is in privatisation talks with a consortium led by Australian investment firm IAS, after it failed to reach agreement with Axon Airlines.
IAS director Angus Clarke says talks are planned with employee groups as "labour costs and labour practices" are key issues for the consortium, although there is no issue with pilots as they are involved in the bid.
Privatisation is set to be completed by the end of April. He admits that many issues remain to be resolved, such as whether the consortium will maintain Olympic's long-haul services, and should it maintain a full-service product or perhaps become some form of low-fare operator.
He says other issues include a lack of up-to-date financial data from Olympic and the need for asset values to be reviewed.
Source: Flight International
