Greece to cut jobs at Olympic

February 18, 2002 Posted: 1407 GMT

ATHENS, Greece (CNN) -- Greece said on Monday it would cut jobs and costs at Olympic Airways to keep the ailing airline flying after efforts to find a buyer failed.

A group controlled by Greek tycoon Pavlos Vardinoyannis could not provide financial assurances by Friday's deadline. The group, Integrated Airline Solutions, had offered to buy a 51 percent stake in Olympic for 102 million ($90 million).

"The next step in our efforts will be a restructuring," Transport Minister Christos Verelis told the Flash radio station.

That plan, including job losses, will be announced by the end of the week. Verelis vowed the debt-ridden Olympic would keep flying: "There will continue to be an Olympic Airways."

Greece has pumped more than $2 billion into the ailing airline. Olympic, long seen as the basket case of the European aviation industry, has a history of political interference and difficult labour relations.

Olympic, which has failed in previous attempts to sell stakes to British Airways and Axon Airlines, is being closely watched by the European Union to make sure that the government does not bail it out. Axon has since suspended operations.

The European Union would not allow the Belgian government to finance state airline Sabena after it collapsed and is unlikely to bend its rules for Olympic, despite the threat of thousands of job losses.

Analysts say the airline needs to shed nearly half it 9,000 employees and many routes to stay afloat.

British Airways dropped its plan to take a stake in Olympic two years ago. BA had an option to take a 20 percent stake in Olympic, the last wholly state-owned national carrier in Europe, after Greece hired the U.K. company's consulting arm Speedwing in an attempt to stem a decade of heavy losses.

The Greek state in 1993 bailed out the company with a massive capital injection, but successive managements have failed to sustain a recovery in its fortunes.

Verelis said the airline had made progress in the year-and-a-half since it started its privatization effort. It has already shed jobs and cut some unprofitable routes.