Olympic Has To Repay Aid - EU September 14, 2005 Olympic Airways and its successor, Olympic Airlines, must repay as much as EUR540 million (USD$663 million) in state aid and taxes to the Greek government, the European Commission ruled on Wednesday. The move could threaten Greece's plan to sell its flag carrier to an investment group, though the government said it would spare no effort to complete a sale despite the ruling. European Transport Commissioner Jacques Barrot said the EU executive's investigation had confirmed concerns that a restructuring plan which involved creating Olympic Airlines as a successor to debt-laden Olympic Airways did not follow EU rules on aid to airlines. "It would be entirely unfair to the other airlines in the European Union to continue in this fashion because they are respecting the rules," he told a news briefing. The Commission's decision highlighted several instances of unlawful aid: EUR40 million (USD$49 million) for aircraft leasing, an overvaluation of assets that led to a payment of EUR90 million (USD$110.5 million) to Olympic Airways, and an assumption of Olympic's financial obligations of up to EUR60 million (USD$73.6 million). Greece also tolerated Olympic's failure to pay more than EUR350 million (USD$430 million) in tax and social security liabilities. "Greece has two months in which to inform the Commission of the measures it intends to take to comply with the decision," the EU executive said in a statement. Barrot said the amount to be repaid would be subject to discussions with Greek authorities but would be at least EUR150 million (USD$184.1 million). A Commission official said the tax and social security payments were not considered aid -- only the missing interest was -- but would still have to be paid. The Commission has said it considers all companies in the Olympic group to be a single entity. Wednesday's decision adds to an outstanding amount of EUR160 million (USD$196.4 million) in illegal state aid that Olympic must repay. Barrot said the Commission would take Greece to the European Court of Justice again if that aid was not recovered. The court could charge the country a daily fine for non-compliance. Greece said it would continue to try to sell the airline, which a government spokesman says has cost its taxpayers about EUR3 billion (USD$3.68 billion). "Despite the fact that the EU Commission's decision hinders Olympic's privatization process, the government will exhaust all means to sell it," Transport Minister Michael Liapis said. "At the same time, the government is looking into alternative solutions for the day after." Liapis blamed policies of previous governments from 1994 to 2003 for Olympic's current state, saying wrong choices and a systematic disregard of EU Commission decisions had led Olympic and its employees to "an absolute impasse". "Olympic Airways (Services) and Olympic Airlines continue to operate until the best possible solution is achieved," Liapis said. Olympic Airways Services contains the group's maintenance, ground and cargo-handling divisions. Union representatives for Olympic's pilots, cabin crew, ground staff and technicians demonstrated at Athens Airport on Wednesday, promising to fight against shutting down the airline. The EU's Barrot said Greece should be in a position to create the conditions for one or more airlines to exist in fair competition. (Reuters) Roger EWROPS