Summary
1. A solution to the subsidy problem at Olympic, similar to Alitalia may be at hand2. The logical player is Aegean to take over Olympic, just as AirOne took over Alitalia3. The EU is forcing the hand of the Greek government to take action, and finally come up with a solution for the long moribund Olympic Airlines.
Analysis
The EU has forced the hand of the Greek government to divest Olympic by allowing them to write-off €3B plus in debt and subsidies. The tender has resulted in two competitors, a local Greek investment group and private carrier Aegean, which is currently the country's most successful carrier.
Given the synergies which would result from merging a primarily short-haul carrier with a long-haul carrier to complete a competitive route structure, it makes sense that Aegean should win this bid. Olympic as a stand-alone long-haul carrier cannot survive on its own without major restructuring, and even a private investment group may have difficulty in changing the corporate culture. Aegean, with existing operations, can more easily integrate ex-Olympic employees into their operations and maintain their successful culture, rather than the other way around.
A strong Aegean may later become a candidate for an international alliance or a potential target of continuing Euro-carrier consolidation.
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
