EU orders Olympic to pay back aid, approves privatization (Roundup)

Sep 17, 2008, 11:55 GMT

Brussels/Athens - The European Commission on Wednesday approved Greek government plans for the privatization of Olympic Airlines, but told the carrier that it must pay back 850 million euros (1.2 billion dollars) in illegal state aid from the sale of its assets.

Transport Commissioner Antonio Tajani said an investigation had shown that Greece's ailing flagship carrier had received financial help from the government since 2005.

'This aid is incompatible with the (European Union) treaty,' Tajani said.

At the same time, the commissioner approved plans for a new, smaller carrier, which is to be born from the ashes of Olympic.

The plan provides for the closure and the selling of assets of the existing debt-ridden company, including its ground-handling and maintenance services, with a parallel commencement of procedures for the establishment of a new company managed by private investors.

The new company will inherit the Olympic Airways name and logo as well as routes and airport slots in Greek and international airports.

The Greek government hopes to find new owners by the end of 2009.

'This decision puts an end to a lengthy dispute between the European Commission and Greece concerning Olympic,' Tajani said.

It remained unclear whether Olympic would be able to recover the entire amount that needed to be returned to the Greek state from the asset sale, which Tajani stressed should take place 'at market prices.'

Greek Transport Minister Kostas Hatzidakis said the major structural intervention by the government regarding the airlines problem 'permanently solves an issue that has occupied Greek society and the political system for the past 30 years.'

He told reporters following a meeting with Greek Prime Minister Costas Karamanlis that the new air carrier would be privatized, offering job security for its workforce.