Greece's private Aegean Airlines on Wednesday submitted a surprise offer to buy its ailing state rival Olympic, outbidding the only other suitor, Marfin Investment Group (MIG).
The bid, about twice MIG's offer, comes a day before Marfin was expecting to clinch the deal and substantially improves the state's options for the debt-ridden Olympic.
"There is no space for two airlines (in Greece)," Aegean Airlines chief executive Eftyhios Vassilakis said shortly after the bid. "To compete successfully in Europe and internationally, Greece needs one strong airline."
An international tender that expired in January had failed to attract big players or satisfactory bids and the government was relieved to get a fresh offer on Wednesday.
"It's positive that there is more than one offer for Olympic," said Development Minister Costis Hatzidakis. "All will be done in the light of day, with respect to laws and transparency rules."
Aegean, which has been slowly eating away at Olympic's market share over the years, offered EUR90 million euros (USD$112 million) for Olympic's flying operations and EUR20 million for its aircraft maintenance base. It also offered EUR60 million to buy Pantheon, a company set up by the government as a successor of debt-free Olympic Airlines.
Aegean's offer tops MIG's EUR45.7 million bid for Olympic's flying operations and EUR16.7 million offer for the technical base.
"The main reason behind our offer for Olympic has to do with ongoing consolidation in Europe, where everything is merging and consolidating and forming larger schemes," Vassilakis said. "The current dynamics ultimately will leave fewer but larger schemes in the airline space."
Also on Wednesday, US-based charter company Chrysler Aviation, which took part in the last tender, said it had improved its previous bid for Olympic's flying activities to EUR46 million.
EU WRANGLES
A deal to sell loss-making Olympic will end strains on the government's budget and wrangling with the EU over illegal subsidies. The government appealed to Greek businesses last month to step in after a tender to privatize the ailing carrier failed to attract big names or high bids.
Greece has been warned for years by Brussels over state aid to Olympic. Its latest attempt to sell the airline was approved by the European Commission, which agreed to suspend action over illegal state aid if the sale went ahead.
"The Aegean bid advantage is that it will take over and operate Olympic immediately, saving the state a lot of money," said an analyst at an Athens securities firm, who declined to be named. The government says it loses about EUR1 million a day from Olympic.
Aegean said it can take over and operate Olympic within 60 days of signing the deal. MIG, whose main shareholder is Dubai Financial Group, had said it could take over after the summer tourist season, after September.
Another analyst said Aegean was prompted into the race late as it had not expected any interest in Olympic after the failed tender, eventually leaving it the only airline in Greece.
Founded in 1957 by the late shipping tycoon Aristotle Onassis, Olympic has steadily declined after decades in state hands. Last year, Aegean for the first time carried more passengers -- 5.97 million -- than Olympic.
