A Greek investment firm backed by Dubai Financial Group has emerged as the winning bidder for loss-making Olympic Airlines, which is being sold by the Greek government. Marfin Investment Group, the largest private equity group in Greece, offered authorities ?177m (Dh822.6m) to purchase the airline and its aircraft maintenance unit, Kostis Hatzidakis, the Greek development minister, said in an emailed statement yesterday.
"The government's legal and financial advisers informed us that the negotiations with MIG's advisers for the sale of Olympic's flying activities and technical base ended successfully," Mr Hatzidakis was quoted as saying by Reuters. Olympic, founded a half-century ago by Aristotle Onassis, the Greek shipping tycoon, operates a fleet of 41 aircraft to 78 destinations and is said to be losing nearly ?1m a day.
Marfin Investment Group (MIG) is 33 per cent owned by Dubai Financial Group, which is a wholly owned subsidiary of Dubai Group, a unit of Dubai Holding, owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai. The Greek government will assume the existing debts of Olympic and the new ownership will manage the airline through a holding company called Pantheon. "Olympic will be much smaller, roughly 65 per cent of its size in terms of assets, while 35 per cent of the company will be sold to pay off debts," said Diogenis Papiomytis, an aviation consultant with Frost and Sullivan in the UK. "The good thing is that the airline can start with a clean sheet."
MIG beat a rival bid by Aegean Airlines, Olympic's biggest Greek competitor, which offered ?170m for the company. Swissport, a European ground handling company, has separately begun talks to purchase Olympic's ground-handling operations. Marfin, which is listed on the Athens stock exchange, has investments in pharmaceuticals, telecommunications, and food companies throughout Greece. Olympic has suffered from union disputes and the European Commission has accused it of receiving illegal state aid. The latest privatisation initiative is the sixth attempt to find a buyer.
Late last year, the Greek transport ministry had listed Qatar Airways and Etihad Airways as interested bidders. Both airlines, however, said they were not interested in the airline, which has reportedly cost taxpayers more than ?2bn in the past decade. However, Mr Papiomytis said Olympic had a monopoly in the domestic market and strong connections in south-eastern Europe and the Balkans. The emergence of a UAE connection raised the possibility that an airline based in the Emirates would step in and help manage the new entity, he said, in the same way that Air France took a 25 per cent stake in the sale of Alitalia last year and now managed the newly restructured Italian carrier.
"Perhaps Dubai would be ideal partners - an airline from the UAE could help in the restructuring process," he said. UAE airlines, meanwhile, could benefit from code-sharing with Olympic to gain access to more European passengers. Gulf airlines are expanding rapidly into European and Asian markets in their bid to become premier long-haul carriers, and it is believed they could benefit from landing slots that the Greek carrier holds at some of the world's busiest airports, including London, Paris and New York.
Negotiations between MIG and the Greek government were still in the early stages, and Mr Papiomytis said the deal could still be derailed. "The process could take a few months and could be stopped at any point, as has happened in the past," he said. About 38 companies from Greece, the US, Europe and the Middle East expressed interest at the start of the privatisation process last autumn. The companies included Iberia, Chrysler Aviation, SkyOne, Swissport, Sky Europe and MyAir.
* with agencies igale@thenational.ae
