Greece Promises to Keep Olympic Airways Flying, Despite Debts, EU Warning

The government promised Tuesday to keep Olympic Airways flying during the summer, despite a European Union warning over illegal subsidies and an admission the national carrier's debts are "considerably higher than euro600 million (US$730 million)."

"Olympic Airways will be flying at Easter and through the summer ... after that, we will do everything we can to achieve the best possible result," Deputy Finance Minister Petros Doukas said.

On Tuesday, European Union regulators warned that Greece must recover euro161 million (US$194 million) in illegal aid to the airline or face fines.

The European Commission said it would ask the EU's high court to impose financial penalties if Greece did not respond within two months.

Doukas said the total amount owed from subsidy payments was about euro600 million but that additional financial losses suffered by the airline had added to the debt.

"I don't want to say how high the debt is, but it is considerably higher than euro600 million," Doukas told private Alpha television.

The Greek government in November postponed plans to privatize the company, now renamed Olympic Airlines, after an earlier EU ruling on the illegal subsidies. A string of financial rescue plans and privatization bids have failed.

Doukas said several investors were interested in buying the carrier, including Greek ship owners, "Arab financial groups," and "overseas venture capitalists" but that a sale was only possible if debts were cleared.

"I won't tell you the tricks we will use ... we're working on the best legal arguments we can come up with," Doukas said, adding that money owed Olympic through travel by government officials could be used to offset some of the debt.

Olympic Airways, in a statement, said the troubled carrier did not face a "sudden and impending halt in operations," despite the two-month EU deadline.

Olympic Airways "will continue to operate, fulfilling its obligations to the utmost, and continuing with the (same) flight) program, within the framework that its stakeholder - the Greek state - has outlined," the statement said.

About 200 Olympic trade unionists traveled to Brussels to stage a small protest outside the EU commission meeting. Several Greek members of the European Parliament, from all political parties represented, were also present.


Associated Press reporter Paul Ames in Brussels contributed to this report.

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