The Greek government is planning to rebrand troubled flag carrier Olympic Airlines as Pantheon Airways from the winter season, as it continues its battle to stop the troubled carrier from going under.

The move comes as the European Commission (EC) steps up its campaign against the Greek government over the failure of Olympic Airlines to pay back state aid. The EC has issued Greece with a “reasoned opinion”, effectively ordering it to comply with a European Court of Justice ruling in May last year that it pay back €161 million of illegal subsidies paid between 1998 and 2002.

This includes €41 million of illegal restructuring aid and another €120 million of operational aid, such as non-payment of various sums the company owes to the Greek state including value added tax on fuel and airport charges.

Athens Airport W445
© Athens Airport

Athens was granted a breathing space after the court judgement to comply, but has failed to do so. By effectively bringing a second case, the EC could force the Greek government to pay a lump sum or a daily fine until it complies with the judgement.

The Greek government is still trying to push through a new business plan that will drastically downsize the carrier, employing only a third of the current 6,000-strong labour force. Investors for the airlines are still being sought, despite two failed privatisation attempts since 2003. The new name is intended to leave behind the Olympic legacy. Observers are far from optimistic that it will be third time lucky, particularly given the continued militancy of the unions. “The value of the company is negative. The government will have to pay someone to take over the airline,” warns Athens-based George Spais, analyst at Deutsche Bank.

Spais says that there are still around a dozen Greek businessmen who may be willing to put money into the airline as a public relations exercise, but notes that the fact that they have not done so yet is a worrying sign. “They are putting their money into Greek media enterprises, which is also a loss maker,” he notes. “They have decided the losses at Olympic are simply too large.”

The timing of any moves towards liquidation would be politically difficult for the government. There are municipal elections in October and a general election in 2008. “The government will want to avoid taking high-risk decisions in the year before an election,” says Spais. However, Brussels is warning that it has to respond to its reasoned opinion by the beginning of June this year. ■


Source: Airline Business