Greece tries to keep Olympic Air aloft
By DINA KYRIAKIDOU
Reuters News Agency
Tuesday, February 19, 2002 – Print Edition, Page B11
ATHENS -- Greece has pledged to keep its ailing Olympic Airways from becoming the third European national carrier to fold in six months, scrambling to draft another rescue plan after last week's failure to sell it.
Transport Minister Christos Verelis said yesterday the government, which sees Olympic as a test of its privatization plans, now wants to restructure the debt-ridden airline.
The high-profile attempt to privatize Olympic flopped when the only remaining suitor missed a Friday deadline to provide the financial assurances demanded.
"The next step in our efforts will be a restructuring," Mr. Verelis told the Flash radio station. He said details of the plan would be announced by the end of the week.
Olympic staff were exasperated with the uncertainty.
"We are living in a constant state of anxiety and insecurity," said an Olympic employee.
Government sources said the new plan, aimed at making the airline more attractive for a future sale, involved splitting Olympic into a flying company with a new business plan, and another that will assume all debts.
Olympic has accumulated well over 100 million euros ($87.34-million U.S.) in debt in taxes, airport fees and contributions to social security funds. Last year, it also took out a commercial loan of $180-million to move to a new Athens airport.
The restructuring foresees voluntary retirements and moving staff to other state positions. Government sources would not confirm press reports of 2,500 job cuts.
The plan foresees funding through private banks, since the European Union, which has seen the failure of two previous restructuring plans it approved for Olympic, has banned Greece from pouring more money into it.
Aviation analysts were skeptical.
Dan Solon at Avmark International aviation consultants in London said the best solution could be for a private investor to start from scratch.
"The way forward could be to simply close the existing operation, to start with a blank sheet of paper," he said.
He said it was unlikely the EU would bend the rules for Olympic after other European airlines had sought aid in vain.
The EU stood firm against Belgian government attempts to put money into the largest Belgian airline, Sabena, which subsequently collapsed last year, as did Swissair after weighty debts finally proved too much to bear in the aftermath of the Sept. 11 hijack attacks.
will they make it??