Olympic Airlines cleared for revival

Greece on Monday transferred control of Olympic Airlines to an Athens-based investment company that has pledged to restore the loss-making flag-carrier to its glory days under its legendary founder, the shipowner Aristotle Onassis.

Marfin Investment Group agreed to pay €177.2m for Olympic in direct negotiations with the government, after the failure in January of an international tender to find a strategic investor.

MIG was chosen over Aegean Airlines, a profitable private Greek airline that last year carried more passengers than Olympic. Aegean’s last-minute bid was ruled out on competition grounds

“This is a one-off opportunity to rebuild a famous brand,” said a MIG spokesman. “We’re taking over Olympic without debts or liabilities.”

The European Commission has given the green light for MIG to acquire Olympic, ending years of disputes over illegal aid payments by successive Greek governments.

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

Founded by Andreas Vgenopoulos, a flamboyant entrepreneur in the Onassis tradition, MIG has built an investment portfolio that includes a leading passenger ferry operator, a hotel chain and private hospitals in Greece, Turkey and the Balkans.

Its biggest shareholder is Dubai Financial Group, an investment vehicle controlled by the Gulf state.

Mr Vgenopoulos has poached three senior Aegean executives to run Olympic’s flight operations, ground-handling and technical base. They are expected to re-hire the majority of its 4,500-strong workforce.

The government will pay compensation or offer jobs elsewhere in the public sector to employees made redundant.

MIG will take over Olympic’s day-to-day operations from April 1, the official start of the summer tourist season, before officially taking over ownership of the airline in October.

The new managers face an uphill task to turn around one of the European Union’s worst-performing airlines amid a global downturn.

The Commission ruled as part of its settlement with Greece that Olympic’s network must shrink by 35 per cent to allow increased competition.

Tourist arrivals, Olympic’s main revenue source, are projected to fall this year by 15-20 per cent.

Olympic makes losses of around €2m a day, while its fleet has an average age of almost 15 years compared to less than two years for Aegean. Its only profitable routes are to Greek islands that qualify for a public service subsidy from Brussels.

Mr Vgenopoulos declined to give details of MIG’s business plan, but associates said Olympic planned to offer high-end services on some European routes – echoing the 1960s when Onassis ran Olympic as his private airline, with a French chef on board and flight attendants in uniforms designed by a Paris fashion house.