New Rescue Plan for Troubled Olympic Airlines Due in Mid-January

The business plan will include privatizing a large part of the airline.


ATHENS, Greece_A rescue plan for the troubled state-run Olympic Airlines should be ready by mid-January, Greek Deputy Finance Minister Petros Doukas said Friday.

"A full business plan (for the airline's privatization) is expected to be ready by mid-January and will then be presented to the European Union Commission," Doukas told Dow Jones Newswires.

"The latest plan intends for private investors to have well over majority control of the airline - not just slightly over 50 percent ," Doukas said.

Greece presented draft legislation in parliament on Nov. 18 to create a new, privately run company out of the troubled state carrier, but did not specify the size of the government stake.

The latest plan, subject to EU approval, aims to be attractive to new private investors, showing Olympic's growth potential, Doukas said.

Private investors will run the company on a non-subsidised basis, he said.

Greece has appointed Texas-based Sabre Holdings as a consultant for the privatization plan, Doukas added.

Greece scrapped its last attempt to privatize Olympic on Nov. 15 in the wake of the European Commission's decision that the company, and its predecessor Olympic Airways, had received around ?700 million (US$839 million) in illegal state subsidies. It was ordered to pay back at least ?150 million (US$179.74 million).

EU Transport Commissioner Jacques Barrot said on Nov.15 that he was waiting to hear from the Greek government about its plans for the airline, but that past illegal state aid needs to be repaid.

Before the EU sanction, preferred buyers had been named as a consortium made up of Greek investment company Olympic Investors and its U.S. partner, York Capital Corp. It was unclear whether those companies would be involved in the restructured company.

Olympic is expected to be relaunched, bearing the same logo and a similar name, next April. Greece will retain the investment bank Lazard as its adviser in the relaunch of the company.

Government officials have promised that staff reductions at Olympic would be achieved through early retirement programs and transfers to other public sector jobs.

Greek media has reported that the 6,000-strong work force at Olympic and affiliated state companies would likely be halved, and that the airline's fleet of 40 aircraft would be cut to 25-30.

Olympic currently flies to 75 destinations in Greece and abroad and carried about 5 million passengers in 2004.

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Paul Tugwell is a correspondent of Dow Jones Newswires

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