World Video | Defence | Foreign Affairs | Natural Events | Trade | NZ in World News | NZ National News Video | NZ Regional News | Search

 

Greece has granted illegal aid to Olympic Airways

Commission finds that Greece has granted illegal State aid to Olympic Airways and Olympic Airlines

The European Commission today declared illegal a number of measures taken by the Greek State which gave an unfair advantage to Olympic Airways and Olympic Airlines, the new company which has taken over its flight operations. This decision closes the investigation, started on 16 March 2004, into the State aid granted since December 2002, when the airline was ordered to repay €160 million in illegal aid.

Between 1994 and 2000 the Commission took a number of decisions authorising public aid for the restructuring of Olympic Airways. In December 2002, however, the Commission found that further aid had been granted to the airline which was incompatible with the common market, and demanded that €160 million be repaid.

That aid has still not been repaid. Following a detailed analysis of the finances of both Olympic Airways and Olympic Airlines, the Commission today found that Greece has continued to grant further aid to these companies, which is incompatible with the common market and therefore illegal, including:

• €40 million from the Greek State and Olympic Airways to cover part of the costs to Olympic Airlines of leasing aircraft;

• an unjustified payment of some €90 million from the Greek State to Olympic Airways when Olympic Airlines was set up and transferred to the State, achieved by overvaluing the assets transferred to the State;

• the Greek State’s toleration of Olympic Airways’ failure to pay more than €350 million in tax and social security liabilities due between December 2002 and December 2004;

• the assumption by the Greek State of a number of Olympic Airways’ financial obligations, e.g. in connection with aircraft leasing contracts and the repayment of a bank loan, amounting to up to €60 million.

The exact amount to be recovered by the Greek state will be defined during the execution of today's decision.

By granting this aid, Greece has given Olympic Airways and Olympic Airlines an advantage not available to their competitors. The Commission therefore asked Greece to recover the illegal aid payments. Greece has two months in which to inform the Commission of the measures it intends to take to comply with the decision.

Background

On 11 December 2002 the Commission took a final decision ruling that aid granted to Olympic Airways was illegal, and asked Greece to recover €160 million. At the end of 2003 Greece adopted a specific law setting up a new company, Olympic Airlines, which took over the flight operations and most of the assets of Olympic Airways, leaving behind almost all of its debts.

The creation of this new company, contrary to standard economic and accounting practice, would have had the effect of circumventing the obligation to recover the aid, as the Court found in its judgment of 12 May 2005.[1]

When it opened its investigation in March 2004, the Commission expressed doubts about the compatibility with the Treaty of the continuing non-payment by Olympic Airways of tax and social security liabilities and about the way in which Olympic Airlines was established in late 2003.

• In effect, what appears to have happened in December 2003 is that all flight operations that were previously carried out within the Olympic Airways Group by Olympic Airways, Olympic Aviation and Olympic Macedonian were concentrated in a new entity renamed Olympic Airlines. Olympic Airlines also took over the slots, traffic rights and public service obligations of Olympic Airways. All other activities — principally groundhandling, maintenance and engineering — remained within Olympic Airways (which has been renamed Olympic Air Services). The latter retained ownership of a number of majority shareholdings in other aviation-related companies in Greece such as catering, information technology and fuel services.

• The Commission has therefore found that Olympic Airlines is a successor company to Olympic Airways and that since its creation it has received substantial State aid. Olympic Airlines leases aircraft either from Olympic Airways or directly from the Greek State and pays significantly less than the head-lease payments, the resultant losses being borne by the State or by Olympic Airways at the State’s behest. The Commission has also found that by overvaluing the assets transferred to Olympic Airlines and by using this valuation as the basis of a ‘cash pre-payment’ to Olympic Airways, Greece has granted illegal and incompatible aid.

• The Commission has found that the Greek State has also granted State aid to Olympic Airways. The most important part of this aid has been its continued forbearance in relation to the company’s tax and social security liabilities.

These new aid payments constitute a violation of the “one time, last time” principle, as the company had already benefited from restructuring aid in the past.

© Scoop Media

 
 
 
World Headlines

 

UN Rights Office On Syria: The “Monstrous Annihilation” Of Eastern Ghouta

Since the Syrian Government and their allies escalated their offensive against opposition-held Eastern Ghouta on 4 February, there have been more than 1,200 civilian casualties, including at least 346 killed and 878 injured, mostly in airstrikes hitting residential areas... Ninety-two of these civilian deaths allegedly occurred in just one 13-hour period on Monday. More>>

ALSO:

Cyclone Gita: 70% Of Tonga Population Affected

The full scale of destruction is beginning to emerge from Tonga in the aftermath of the severe tropical cyclone Gita. Around 50,000 people, or almost 70% of the country’s population, have been affected, a third of whom are children. More>>

ALSO:


Gita: Samoas Clean Up After Being Swamped By Cyclone

Apia in the wake of Gita Photo: Rudy Bartley The clean up is continuing in the two Samoas after Tropical Cyclone Gita hit on Saturday morning. More>>

ALSO:

Grand Coalition : Germany's two main political parties set to govern under Angela Merkel.

The liberal-conservative Christian Democratic Union (CDU) and the centre-left Social Democrats (SPD) negotiated through the night in a marathon final push to nail down an agreement. More>>


80 Passengers: Kiribati Ferry Disaster

The United Nations Children’s Fund (UNICEF) and the World Health Organization (WHO) are working with the Government of Kiribati to support children, families and communities affected by the recent Butiraoi ferry disaster. More>>

ALSO:

Campbell On: the US demonising of Iran

Satan may not exist, but the Evil One has always been a handy tool for priests and politicians alike. Currently, Iran is the latest bogey conjured up by Washington to (a) justify its foreign policy interventions and (b) distract attention from its foreign policy failures. More

ALSO: