Forced landing for Olympic Airlines

In early 2008, the closure of Greece’s Olympic Airlines in its present form and the creation of a new company with fewer employees appear increasingly likely. This arguably seems to be the government’s only solution, following a decision by the European Commission that the company must return to the Greek state the €540 million subsidies it obtained in the 1998–2004 period. The workforce of Olympic Airlines has expressed concerns about the government’s plans.

Recent political and judicial developments

The fate of Olympic Airlines has again come to the fore following a series of developments on the political as well as the judicial and business levels. These developments are the latest stage in a long process of seeking the best solution to the financial impasse the company has been facing in recent years. The period since the 1990s has seen two recovery programmes, voluntary exit schemes for staff and a change in the legal status with the denationalisation of the Olympic Airways group (GR0401104F). Meanwhile, successive Greek governments have examined the intentions of foreign airlines, as well as of private groups, as potential buyers of the company.

The latest development involves the European Commission’s refusal to offset the €540 million that the company received in the form of state aid in the 1998–2004 period with the €900 million in capital awarded to Olympic Airlines by the Greek courts as payable by the Greek state. This was the outcome of a meeting between the Greek Minister of Transport and Communications, Kostis Hatzidakis, with the European Commissioner in charge of Transport, Jacques Barrot, in late November 2007. The Commission ordered Olympic Airlines to repay the amount of €540 million received in illegal state aid to the Greek state. The Greek government has applied to the European Court of Justice (ECJ) challenging the Commission’s decision.

Despite this legal challenge, the unfavourable outcome of the meeting in November led to Mr Hatzidakis stating that Olympic Airlines will have to cease operations in its present form. The minister’s statement sparked strong criticism from all of the opposition parties and the airline’s workforce, as well as from legal circles. Legal experts argued that, although the possibility is high that Greece will win the case in the ECJ against the Commission’s decision, the government appears to have set the closure of Olympic Airline in motion on its own.

Possible future scenarios

Minister Hatzidakis has, in principle, made a commitment that, no matter what form Olympic Airlines will take in the future, it will continue to serve the country’s border areas and workers’ rights will not be affected.

In terms of the future of Olympic Airlines, the most likely scenario is that a group of aviation companies will be set up composed of subsidiaries in the areas of routes, technical support, ground services and fuel supply, some or all of which will be sold to private investors. The new group will have a smaller fleet of aircraft and restrict its operations to domestic and regional flights. As concerns the company’s human resources, the government has made a commitment to safeguard jobs. However, it has not been made clear whether this commitment also refers to fixed-term contract workers. The possibility of voluntary exit for workers approaching retirement is also being examined, along with transfer options for employees to jobs in other areas of public services. Although no definite decisions have been taken concerning the number of workers in the new company, it is thought that ultimately a number of personnel, most of them on fixed-term employment contracts, will be left outside these arrangements. It is estimated that about 2,000 out of the present 8,500 employees will remain with the company in its new form.

Opposition from workers

A meeting on the future of Olympic Airline held between the minister of transport and the leadership of the Federation of Civil Aviation Unions (Οµοσπονδία Σωµατείων Πολιτικής Αεροπορίας, OSPA) in early December proved unfruitful. The company’s employees asked for Minister Hatzidakis’ commitment not to close down Olympic Airlines and promised that they would do their best to restore the company to profit. According to the worker representatives, the minister did not commit to keeping Olympic Airlines in operation; therefore, they considered that there was no point in continuing the dialogue and asked for the Prime Minister, Kostas Karamanlis, to intervene to prevent the closure of the company. The workers have stated that they consider Mr Hatzidakis to be a ‘persona non grata’ on Olympic Airlines flights, and the President of OSPA, Manolis Patestos, went to Brussels to meet with the competent EU Commissioner without Mr Hatzidakis’ being present. Finally, the company trade unions stated that they would not take industrial action over the Christmas and New Year holidays, in order to avoid any cause for negative comments against the company and to have passengers on their side.

Commentary

With the latest developments, the government has revealed its intentions regarding the future of Olympic Airlines. In other words, either a new company will be set up, with fewer flights and fewer workers, or Olympic Airlines will be closed, resulting in negative consequences for the workforce and the inhabitants of remote areas of the country, such as the Greek islands. In any case, the Greek government does not intend for the present situation to continue, as it entails a risk for the country if legal action is taken against it in the European Court of Justice and fines of €10,550 per day are levied. Nonetheless, government circles have stated that the opposition of the workforce, citizens and groups such as tourism businesses will be taken into account, making more likely the scenario of the start-up of a new aviation company, which will offer fewer flights and have fewer employees.

Stathis Tikos, Labour Institute of Greek General Confederation of Labour (INE-GSEE)