The issue of state aid could be back on the agenda again in Brussels as Olympic Airways and Sabena run into difficulties. "The question of aid is in the picture," concedes a source in the European Commission (EC).

There had been concern in Brussels at the lack of information from Athens on its plans for Olympic since British Airways declined to take up an option on a 20% stake last summer. However, insiders at the EC say it is now being kept "meticulously informed" by the Greek Government. Four bidders are interested in the airline and a key issue is what will happen to the company's heavy debts. Brussels agreed a state aid package for Olympic in the late 1990s under the "first time last time" principle. Under EC guidelines, a government shareholder must show that its investment is in line with what might be expected of a private investor.

Meanwhile, the EC is also being kept informed of developments at Sabena, Alitalia and TAP Air Portugal. SAir has withdrawn from the TAP privatisation process, where it was preferred bidder, although it has agreed to meet TAP's short-term cash needs.

Source: Airline Business