EU Court Rules Against Greece In Airline Case

February 14, 2008

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Greece failed to comply with a European Commission decision that aid to Greek carrier Olympic was illegal and should be recovered, a European Union court ruled on Thursday.

"By not taking within the prescribed period all measures necessary to put an end to aid declared unlawful and incompatible with the common market, and to recover it from the recipients, Greece has failed to fulfill its obligations," the Court of First Instance said in a statement.

In December 2007, the Commission launched an investigation into whether Olympic Airlines received illegal state aid.

"It shows that the Commission is actively following this file," Commission spokesman Michele Cercone told a daily briefing. "It also confirms the urgent need for a viable and legally sound solution to this file."

"This is in the interest of the European aviation sector, of Greek consumers and taxpayers, but also of the employees of Olympic Airways Services and also Olympic Airlines and is indispensable in order to preserve a continuity of services to remote areas of Greece," he said.

Greek Transport Minister Costis Hatzidakis said this was a negative development further damaging the airline.

"Today's decision is another link in the chain of damning decisions," he said in a statement. "It is undoubtedly a very unpleasant development."

Greece has been trying for years to sell the debt-ridden airline, renamed from Olympic Airways, but repeated calls have generated no interest.

Hatzidakis has said the government was committed to changing the shape of the existing company into a slimmer, more attractive airline, to attract investors.

Union leader Manolis Patestos said the court's decision was on matters that had been settled in Greek courts last year.

"This is a verdict on matters already decided last year when the airline won compensation for money owed by the Greek state," he said. "In any case this decision will not affect the airline at the moment and we will continue flying as planned."