Aegean bids to acquire Olympic

Aegean Airlines, the Athens-listed Greek carrier, on Wednesday launched a €170m takeover bid for the troubled state-owned Olympic Airlines.

Aegean, which was formed in 1999 and last year carried more passengers than the Greek flag carrier for the first time, said it was seeking to develop a Greek airline with the “necessary critical size, strength and capability” to face competition in the single European market.

The acquisition would take it for the first time into long-haul markets with Olympic flying routes to the US, Canada, the Middle East and South Africa.

Aegean is competing against a rival bid from Greece’s Marfin Investment Group, led by Andreas Vgenopoulos, a flamboyant local entrepreneur, which started negotiations with the Greek government last month after an international tender collapsed.

The European Commission last year opened the way for Olympic’s privatisation by approving the write-off of more than €2.6bn in accumulated debt. It also suspended court action over the repayment of €850m in state aid.

Aegean said it was committed to taking over the operation within 60 days of signing an agreement with the government, which would save the state from hundreds of millions of euros of further operating losses, which would be incurred if the transaction was delayed.

It sought to allay competion fears and said it was ready to give up to rivals part of the operations of the enlarged group in the domestic Greek market.

It said the proposed merger of the two groups was a response to the growing wave of airline consolidation in Europe and was aimed at safeguarding “the long-term provision of competitive high-quality services from a Greek-based and owned airline”.

The two carriers combined would only account for 17 per cent of the total international traffic to and from Greece, with international flights accounting for 80 per cent of total Greek traffic.

The merged group would still be far less dominant than the main national carrier in most European markets, it said.

Aegean is hoping that the recent merger of Alitalia and Air One in Italy will provide support with the competition authorities for its own deal in Greece.

It carried 6m passengers last year and is in the midst of a $1.2bn four-year expansion programme to renew and expand its fleet with orders for 27 Airbus 320 family short-haul jets.

Marfin, an investment holding group listed on the Athens stock exchange, said last month it was committed to investing at least €200m to acquire Olympic and to restructure its operations.

It was the only group that responded to the government’s last-ditch call for a private Greek investor to rescue the airline, which has been losing an estimated €2m a day.

The government has set a minimum price of €110m for Olympic based on an independent valuation of its assets. It is keen to reach a deal quickly so that services can be upgraded by the start of the tourist season in April.

Marfin has cash reserves of €1.2bn following the sale last year of its minority stake in Hellenic Telecoms, the public operator, to Deutsche Telekom.