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Thursday, 21 February, 2002, 16:38 GMT
Greece announces Olympic rescue plan
Olympic Airways plane
The Greek airline may now cut loss making routes
Greece's debt-ridden state airline is to be split into separate units with the loss of about 2,000 jobs.

The restructuring announcement is the government's latest effort to persuade investors to buy the airline and is seen as a last, desperate attempt to avoid bankruptcy.


We believe that there must be a viable, major national air carrier

Greek finance minister
The push to privatise Olympic Airways fell apart at the weekend, prompting a promise from the government to restructure it.

Greek investors failed to come up with the cash and the post-11 September slump in air travel meant foreign investors stayed away too.

Olympic looked to be on the brink of following Sabena and Swissair into collapse and becoming the third European airline to fail in six months.

More attractive package

Greece is still hoping for a cash injection of between 100m and 150m euros (61-92m; $87-131m) for the airline.

Aristotle Onassis
The airline was founded by Aristotle Onassis
In order to create a more attractive-sized unit for potential buyers, flight activities will be split out from other departments such as repair, catering and ground handling.

"Our target is a new Olympic...with a long-term viability prospect," Transport Minister Christos Verelis said.

There will also be a review of the sustainability of unprofitable routes and existing work practices.

The government has been desperately struggling to sell a majority stake in the airline in order to keep it afloat and avoid the embarrassment of not having a national airline.

Grace period

"We believe that there must be a viable, major national air carrier which will serve the needs of Greece, European countries and the region," Finance Minister Nikos Christodoulakis stressed again on Thursday.

The airline now has two months to raise more funds and reshape itself before it is offered on the market again.

The restructuring must also receive EU approval.

Olympic Airways is already being investigated by the European Commission for a potential breach of rules on state aid during the 1990s.

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 ON THIS STORY
Aviation Consultant James Halstead
"Olympic is one of the sick men of the European aviation industry"
See also:

19 Feb 02 | Business
Olympic faces EU probe threat
18 Feb 02 | Business
Greek airline sale collapses
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