Saturday March 7, 05:16 PM
Olympic Airlines to go private under Marfin deal
ATHENS (AFP) - Greece's debt-ridden national carrier Olympic Airlines is heading back into private control after 30 years under a deal with Marfin Investment Group announced Saturday.
The Greek state, which bought the company from legendary Greek tycoon Aristotle Onassis, is selling the airline for 177.2 million euros (224 million dollars), Development Minister Costas Hatzidakis said.
"Negotiations with Marfin Investment Group to buy out the air operations of Olympic Airlines have succeeded"," Hatzidakis said in a statement.
"The outcome of these negotiations will be approved by the interministerial commission on privatisations," he said, if it got a green light from the European Commission, which enforces EU competition law.
The commission is expected to respond next week, a ministry source said.
Marfin submitted a 45.7 million euro (57.2 million dollar) bid on February 13 to acquire the flight operations of Olympic Airlines, soon after the failure of an earlier state attempt to find a buyer.
Greece's largest buyout fund, MIG also bid 16.7 million euros for Olympic's maintenance, repair and overhaul assets.
On the same day, global ground handling firm Swissport offered 44.8 million euros for Olympic's ground handling assets.
Talks with Swissport will be extended by a week, Hatzidakis said, adding that MIG is also prepared to assume ground handling if the negotiations fail.
The offers exactly matched the minimum valuation of Olympic's assets by the Greek government's independent advisors.
The Greek state also expects to recoup another 70 million euros set aside to create Pantheon (LSE: PIN.L - news) , a temporary holding company for Olympic.
The deal saves Greece around 150 million euros a year in operational losses from ailing Olympic, the ministry source told AFP.
The government decided to pass on significantly higher offers submitted by US-based charter operator Chrysler Aviation and Aegean, Greece's leading private airline and Olympic's main domestic competitor.
Chrysler's 210-million bid lacked the necessary financial backing while the prospect of selling Olympic to Aegean, who offered 110 million euros, raised competition concerns, the state's advisors said.
Olympic's powerful unions had also warned they would oppose any deal with Aegean whom they saw as struggling OA's nemesis.
Early union reactions to the MIG deal were mixed with technicians hailing it as "a new age" and civil aviation staff waiting for conclusive information.
"We have not been fully informed as to the details," said Markos Kandylakis, chairman of the Greek federation of civil aviation unions (OSPA).
If successful, Olympic's acquisition will enhance MIG's current collection of some of the biggest household names on the Greek market.
MIG already controls Greece's main dairy and food group Vivartia (Frankfurt: A0ET6W - news) and dominant ferry operator Attica. It also has stakes in the health, tourism, real estate and information technology sectors.
Listed on the Athens Stock exchange, 58 percent of MIG's share capital is held by Greek strategic investors. International investors hold another 24 percent and Dubai Group owns the remaining 18 percent.
Swissport is owned by Ferrovial, a major European infrastructure and services firm, and has presence in 179 airports across 41 countries.
Greek governments had spent years seeking private investors to take over Olympic Airlines but the process was complicated by the European Commission's demand that the company repay millions of euros in illegal state aid.
The European Commission last year gave the green light for Greece's plans to privatise the airlines, declaring however that 850 million euros of illegal state aid must be returned.
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