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EC Takes Greek Govt. To Court Over State Aid

Fri Apr 28, 2006 12:58 am


The EC announced yesterday that it has decided to refer Greece to the ECJ for failure to comply with its September 2005 decision, which required the country to quantify and recover all unlawfully granted aid to Olympic Airways and its successor Olympic Airlines since December 2002. According to the EC's calculations, the aid in question amounted to approximately €540 million ($669.2 million).

The court also required Greece immediately to suspend all further aid to Olympic and gave it two months to inform the EC of the steps taken to comply. "Nevertheless, at this stage, the exact amount to be recovered has not been determined yet. No recovery has taken place, and Greece has not demonstrated that it is has suspended all payments of new illegal aid," the Brussels-based Commission said in a statement.

The dispute goes all the way back to December 2002, when the EC asked Greece to recover an initial €161 million of illegal aid. The ECJ ruled in May 2005 that Greece was not compliant, forcing the Commission to send a "reasoned opinion" three weeks ago warning the government that it had two months to comply or the EC would refer the case back to the court and seek financial penalties (ATWOnline, April 5).
Greece has said it will send a "ready and complete" response to Brussels.

Greek Finance Minister George Alogoskoufis said the airline would continue to operate under its present form "at least until October".
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RE: EC Takes Greek Govt. To Court Over State Aid

Fri Apr 28, 2006 1:26 am

Its amazing how the Greek government keeps flaunting EC rules by the continued propping up of Olympic. The carrier simply has no reason to exist based on the most basic business/economic principles.

One interesting note, is that the BBC article mentions Greek finance minister stating the airline will operate as is until October. Somewhat curious timing, as Greece will have local elections in October, and the ruling government obviously does not want to take any unpopular measures with Olympic going into polls.

While Greece on the global scale is a smallish market, the country deserves a real, atleast pan-Europe focused airline. Its unlikely that neither anyone will step forward to create one, nor Aegean being able to grow significantly more with Olympic still in the picture skewing the marketplace.
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