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Olympic Airlines

Olympic Airlines unlikely to win gold  Sep 30, 2008

LONDON - After the Alitalia saga, another European state-owned airline is ready for a private sale: Greece is putting its own Olympic Airlines on the block, and called on Tuesday for buyers to make an offer. The problem is that despite the momentum of consolidation in the airline sector, the line of interested parties is not likely to be long.

"Almost nobody will be interested," said Nicholas van den Brul, an analyst with BNP Paribas. He said Olympic Airlines would be too small to attract major buyers like Air France-KLM (other-otc: AFLYY - news - people ) or Lufthansa (other-otc: DLAKY - news - people ), while its poor business history would not do it any favors either.

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 (other-otc: ALAIF - news - people ), 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. (See "Alitalia Finds Its Wings.")

Unlike some of the other airlines that are up for sale in the current environment of high oil prices and slumping demand, Olympic Airlines has some pretty hefty baggage--2.7 billion euros ($3.9 billion) in total losses, according to the Greek government. It also owes 850 million euros ($1.2 billion) to the European Commission, which has accused it of illegally receiving state aid from the Greek government.

According to Merck Finck analyst Robert Heberger, there were so many airlines looking for buyers at the moment that major European airlines simply could not buy them all. "Austrian Airlines, SAS, BMI, Alitalia, Iberia ... they are all basically available if the Big Three [Lufthansa, Air France, British Airways] want to buy one," said Heberger, "but I can't imagine that they will buy everything."

The Greek government's call for buyers on Tuesday came after a series of protests from Olympic Airlines employees against the privatization plan, including the blocking of the main runway of Athens International airport last week. Around half of the airline's 8,100 employees have been promised jobs in the public sector as compensation, but there is no doubt the airline will shrink as a result of the sale.

Olympic Airlines unlikely to win gold

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