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Difficulties in Establishing a New Olympic Airlines

As we go to press, negotiation meetings to determine the future of Olympic Airlines continue. The EU gave the government until the end of March to develop a plan for liquidating the airline, and a business plan for the new company with private capital for funding.

A key issue is the Greek government’s past financial support of the airline, considered illegal, and grounds for taking Greece before the European Court for non compliance with the Commission’s 2002 decision against government subsidies.

Transportation Minister Michalis Liapis was scheduled to meet with EU Commissioner of Transport Jacques Barrot in Brussels at the end of March to present the government’s plan.

Deputy Minister of Finance Petros Doukas announced that contact with investors is almost complete. “Discussions are being held with Greek and foreign investors who are interested in participating in the new scheme. The investment scheme, the business plan and the government’s proposal regarding legal issues are ready,” he said.

However, the new plan presented, according to EU sources, will only be considered after the existing airlines’ property is liquidated and sold to pay off debts that reportedly amount to about 540 million euros.

Latest news reports quote Transport Minister Liapis as saying that there is immediate danger that the European Union’s patience has been exhausted, which could mean the closure of Olympic Airlines.

Sources say the new company’s four-year business plan envisions employing 2,162 people with possibly over 2,800 by 2010. Today, the Olympic Group employs less than 8,000 people.

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