Greece announced today that it has launched a tender to sell off its state carrier Olympic Airlines (Greek: Ολυμπιακές Αερογραμμές, Olympiakés Aerogrammés – OA). Pantheon Airways and two other
holding companies have been created which in turn would be sold off.
Assets that will be transferred to Pantheon Airways -
- Right to use the Olympic brand logo
- Airport slots
- Aircrafts
- IT Systems
After the sale, the airline will cease operations.
The plan did trigger series of protests from employee at Olympic Airlines. Last week in protest, the employees blocked the main runway at Athens International airport. Though, around half of the 8100 employees have been promised jobs in public sector.
Does sound like Alitalia all over again?
Some analysts consider the airline size and poor business history not big enough to get interests from European Airlines like Lufthansa and Air-France KLM.
From Forbes -
The likeliest solution is
therefore to be a local one, with Greek investors or a small airline
perhaps making an offer. This might resemble the rescue of Italian
state-owned airline Alitalia,
which narrowly avoided liquidation after unions backed a consortium bid
from Italian investors. There is still a chance Air France-KLM and
Lufthansa will take a minority stake in the airline.
Interested in buying? Read the process from Reuters -
PROCESS
– The buyer of Pantheon Airways will be selected via a
multi-stage process. Following the expression of interest,
buyers will be given access to a data room and due diligence
with a view to prepare their bids. The aim is to conclude the
tender within three months, by the end of 2008.EXPRESSIONS OF INTEREST
– Interested parties must submit an expression of interest
by Oct 31. They will receive summary information describing the
transaction structure and the assets for sale. Short-listed
applicants will be allowed access to a data room and a meeting
with management after a confidentiality agreement.
The report in Forbes fails to take into account the unique position of Olympic Airlines operations between Europe and the Middle East, or its important presence in the lines to and from London, Paris and New York, where it controls 40% of the market. And of course, the Olylmpic slots at Heathrow also hold great commercial value.
It also fails to clarify that its debts will NOT burden the buyer – there is an agreement to that respect with the European Commission. Furthermore, and unlike Alitalia, the buyer is not obliged to hire any of the employees of the company. That said, pilots, technicians, some administration staff and seasonal employees all have the experience to be of great value should the buyer wish to hire them from the market.
It is right in one respect, though: there are quite a few airline companies up for sale at the moment. Still, this is the first time that Olympic joins the list with the consent of the European Union.
Katerina,
Thanks for the insight. I do agree that Alitalia and Olympics Airlines differ a lot (esp. with regards to debt undertaking and unions).
Moreover, Forbes seems to report an analyst’s view (Nicholas van den Brul, an analyst with BNP Paribas) and might be completely biased to his position.
I won’t be surprised if some major European carriers show interest.
Thanks for the comment!
[...] 6, 2008 by Airline Blogger Earlier I blogged about Greece’s flag carrier going private. The conservative Greek government is trying to privatize a number of public utilities services [...]
It is truly sad to see the demise of an airline with lots of heart!This airline has a tremendous amount of potential as it joins east with west as well as south(Africa).
I do know that the Greek people living abroad invariably prefer to travel with this airline.It has a lot of tradition in this respect . It was an airline that actually made money in its heyday as a private entity,however since being taken over by the government it slowly but surely deteriorated and has reached the bottom now.As most government enterprises go this became a political issue and managed by politicians and not business men.
Nick,
It seems that that the government in Greece is not trying to solve the problem but trying to get rid of the airline. I wonder if some private consortium of investors or individual investor can buy and save the airline.
I believe that as i said before it has a tremendous amount of potential, it would be great if an investor or investors could save the airline with it’s current name! there hoever must be a total reshuffle in management-although i believe that a union is good to have-the unions OA had made it totally unproductive together with mismanagement from the govt people.
Who would want to buy a derelict airline like Olympic that owes Billions of Euros. Olympic is not a profitable airline !