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18.2.2011 Official
Journal
of
the
European
Union
L
45/1
IV
(Acts adopted before 1 December 2009 under the EC Treaty, the EU Treaty and the Euratom Treaty)
COMMISSION DECISION
of 14 September 2005
State aid measure C 11/04 (ex NN 4/03) — Olympic Airways — Restructuring and privatisation
(notified under document C(2005) 2706)
(Only the Greek text is authentic)
(Text with EEA relevance)
(2011/97/EC)
THE COMMISSION OF THE EUROPEAN COMMUNITIES,
on 9 September 2003. By letter dated 17 September
2003 (TREN A/30881), the Greek authorities stated
that they intended to submit this information in due
Having regard to the Treaty establishing the European
course.
Community, and in particular the first subparagraph of
Article 88(2) thereof,
(4) On
25
September
2003
the
Commission
received
an
official complaint about the privatisation of Olympic
Having regard to the Agreement on the European Economic
Airways from a competitor, Aegean Airlines (TREN
Area, and in particular Article 62(1)(a) thereof,
A/30589).
Having called on interested parties to submit their comments
(5) The
Privatisation
Law
and
the
reply
to
the
information
pursuant to the provisions cited above ( 1 ),
injunction were sent to the Commission by letter dated
29 September 2003 (TREN A/30866). Certain
information was still missing, however, and the
Whereas:
Commission advised the Greek authorities accordingly,
by letter dated 31 October 2003 (TREN D/17821), a
copy of which was also subsequently faxed to the
Greek Permanent Representation on 4 December 2003.
1. PROCEDURE
(1) In
a
letter
dated
3
March
2003
(TREN
A/26534,
25
July
2003) the Greek authorities underlined their
(6) On
12
December
2003,
before
the
Commission
had
commitment to privatise the State-owned airline
completed its examination of the compatibility with
Olympic Airways and described the steps they had
Article 87 of the Treaty of the measures for the restruc
already taken to that end.
turing and privatisation of Olympic Airways, a new
company came into being, under the name ‘Olympic
Airlines’. The information injunction proceedings
(2)
In the absence of a formal notification, the Commission
initiated by the Commission on 8 September 2003
issued an information injunction on 8 September 2003,
were therefore now entered in the State aid register
which was notified to the Greek authorities on
under case number NN 4/03.
9 September 2003 (C(2003) 3266). This required the
Greek authorities to provide all the information
necessary to enable the Commission to examine
(7) On
15
December
2003
(TREN
D/22742),
the
whether the measures for the restructuring and privati
Commission reiterated its request for information on
sation of Olympic Airways were compatible with
the privatisation; the Greek authorities provided the
Article 87 of the Treaty.
information requested by letters dated 18 and
19 December 2003 (TREN A/38288 and TREN
A/38258).
(3)
On the same day the Commission wrote to the Greek
authorities (TREN D/15287) insisting that they should
notify the Commission of the law providing for the
(8) On
15
January
2004,
a
new
request
for
additional
privatisation of Olympic Airways, which was adopted
information was sent to the Greek authorities (TREN
D/160), who replied in two letters both dated
( 1 ) OJ C 192, 2.7.2004, p. 2.
16 January 2004 (TREN A/11076 and TREN A/11077)

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Official Journal of the European Union
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(9) On
16
January
2004
the
Commission
wrote
to
the
Greek (15) They
have
also
provided
the
Commission
departments
authorities regarding Athens International Airport (‘AIA’),
with information on the following issues:
at Spata, and its ongoing relationship with Olympic
Airways/Airlines. The Greek authorities replied by letter
dated 23 February 2004. A further request for
information on this subject was sent to the Greek
— Law 3259/2004, granting Olympic Airways
authorities on 15 June 2004, and answers to that letter
temporary immunity against enforcement
were received on 4 August 2004.
proceedings brought by creditors (e-mail dated
22 December 2004), and
(10) By
decision
of
16
March
2004,
notified
to
Greece
by
letter dated 16 March 2004 (SG(2002) D/228848), the
— Law 3282/2004, whereby the State took over
Commission initiated the procedure laid down in
Olympic Airways’ obligations towards financial insti
Article 88(2) of the Treaty. The case was registered
tutions in respect of the financing and leasing
under number C 11/04.
arrangements for Olympic Airlines’ Airbus A340-
300 aircraft. (e-mails dated 22 December 2004 and
4 April 2005).
(11) The
Commission’s
decision
to
initiate
the
formal
investi
gation procedure was also published in the Official Journal
These additional clarifications will be taken into
of the European Union ( 2 ). The Commission there invited
consideration in the present Decision where they are
interested parties to submit their comments. Greece sent
relevant to the subject matter and shed light on the
comments to the Commission by letter dated 11 June
questions the Commission raised when it initiated the
2004.
procedure.
(12) Within the time allowed by the notice announcing the
2. THE FACTS
initiation of the procedure the Commission received
comments from two other interested parties. These
2.1. PAST COMMISSION DECISIONS REGARDING OLYMPIC
comments were submitted to the Greek authorities for
AIRWAYS AND ITS SUBSIDIARIES
their observations. Greece’s observations were received
on 3 November 2004.
The 1994 Decision

(16) On
7
October
1994
the
Commission
adopted
Decision
94/696/EC ( 3 ) (‘the 1994 Decision’) declaring that aid
granted or to be granted by the Greek State to
(13) On
11
October
2004
the
Commission
sent
a
letter
Olympic Airways was compatible with the common
giving the Greek authorities formal notice that it
market provided that Greece met a series of
intended to issue a suspension injunction if within ten
commitments listed in the Decision.
days of receipt of the letter it did not receive satisfactory
information demonstrating that Greece was no longer
making aid payments to the beneficiaries. The Greek
authorities were asked to submit their comments on
The 1998 Decision
the matter. The Greek authorities replied to this letter
of formal notice on 28 October 2004. Greece argued
(17) Several
of
the
conditions
attached
to
the
1994
Decision
that issuing an injunction at this stage would seriously
were not observed, and on 30 April 1996 the
jeopardise the intensive efforts Greece was making to
Commission decided to reopen the procedure laid
find a solution, and would be disproportionate and
down in Article 88(2) of the Treaty and to initiate
unjustified.
proceedings with regard to new and non-notified aid
which had come to its attention ( 4 ).
(14) Since the submission of those observations the represen
(18) On
14
August
1998,
the
Commission
adopted
Decision
tatives of the Greek authorities have at regular intervals
1999/332/EC ( 5 ) (‘the 1998 Decision’) declaring that
kept the Commission services apprised of developments
certain aid granted or to be granted by Greece to
with regard to this point (at meetings dated 17 December
Olympic Airways was compatible with the common
2004, 19 December 2004, 3 February 2005, 7 February
market in the context of a restructuring plan covering
2005 and 28 April 2005, and by letters dated
the period 1998-2002. Once again the aid was auth
22 February 2005 and 19 April 2005) and with regard
orised subject to a number of conditions.
to the ongoing restructuring and privatisation of
Olympic Airlines and of Olympic Airways Services.
( 3 ) OJ L 273, 25.10.1994, p. 22.
( 4 ) OJ C 176, 19.6.1996, p. 5.
( 2 ) See footnote 1.
( 5 ) OJ L 128, 21.5.1999, p. 1.

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The 2000 Decision
provided they allowed the immediate and effective
execution of the Decision. The aid to be recovered was
(19) In
July
2000
Greece
notified
the
Commission
that
it
to include interest from the date on which it was at the
intended to use the remaining authorised aid for a
disposal of the beneficiary until the date of its recovery.
series of loan guarantees, to be contracted before the
end of 2000, for the purchase of new aircraft and for
investment necessary for the relocation of Olympic
Airways to Athens International Airport at Spata. By
letter of 10 November 2000 (SG(2000) D/108307), the
(24) Greece
was
to
inform
the
Commission
within
a
period
of
Commission informed the Greek authorities that it had
two months from the date of notification of the Decision
decided to amend part of the 1998 Decision with regard
of the measures it was taking to comply with it. The
to the aid measure concerning the loan guarantees.
Decision was notified to the Greek authorities by letter
dated 13 December 2002 (SG(02) D/233148), and was
published in the Official Journal of the European Union on
28 May 2003.
The 2002 Decision
(20) On
6
March
2002
the
Commission
decided
to
initiate
(25) On
11
February
2003,
following
on
from
the
2002
the formal investigation procedure laid down in
Decision, the Greek Government informed the
Article 88(2) of the Treaty. It expressed concern that
Commission that it had received independent advice
the aid allowed by the 1994 and 1998 Decisions
that Olympic Airways had not received preferential
might have been misused, that the company’s restruc
treatment, and that therefore the Government would
turing plan might not have been implemented, and
not implement the requirements of the Decision
that new illegal State aid might have been granted.
regarding the recovery of the sums that the Commission
had judged incompatible.
(21) On 9 August 2002 the Commission sent the Greek
authorities a further injunction requiring them to
Follow-up to the 2002 Decision
provide the information previously requested. In
particular, it sought accounts and figures relating to the
(26) On
24
February
2003
Olympic
Airways
brought
an
payment of operating costs by the State. The replies
action challenging the Decision before the Court of
provided by Greece were insufficient.
First Instance (Case T-68/03). Greece did not ask to
join the action, and did not bring a separate action chall
enging the Decision before the Court.
(22) On
11
December
2002
the
Commission
adopted
a
final
negative decision concerning aid granted by Greece to
(27) On
6
March
2003
the
Commission
informed
the
Greek
Olympic Airways (Decision 2003/372/EC ( 6 ), ‘the 2002
Government that it was under an obligation to comply
Decision’). The Commission there found that aid
with the 2002 Decision. On 26 June 2003 the Greek
previously granted by the State and authorised by the
Government replied, saying that it was examining the
Commission was incompatible with the Treaty on
legal effects of the 2002 Decision and of the procedure
account of the failure to comply with the relevant
the Commission had followed in adopting it. It also
conditions, notably the failure correctly to implement
assured the Commission that it intended to carry out
the restructuring plan. In addition, the Commission
the recovery. It did not carry out the recovery, nor did
found that Olympic Airways had received new aid that
it provide the Commission with a timetable for doing so.
was illegal and incompatible with the common market,
The Commission was accordingly obliged to bring an
in that the Greek State had tolerated the non-payment or
action before the Court of Justice for failure to comply
deferment of the payment dates of certain social security
with the Decision, which it did on 3 October 2003 (Case
payments, value added tax on fuel and spare parts, rents
C-415/03).
payable to airports, airport charges, and a tax imposed
on passengers departing from Greek airports known as
spatosimo.
(28) The
Court
of
Justice
ruled
in
the
case
on
12
May
2005:
it
found in favour of the Commission ( 7 ). The Court
(Second Chamber) declared that by failing to take
(23) The
Decision required Greece to take the necessary
within the prescribed period all the measures necessary
measures to recover from the beneficiary the aid of
for repayment of the aid found to be unlawful and
GRD 14 billion (EUR 41 million) referred to in
incompatible with the common market — except that
Article 1 of the Decision, and the new aid referred in
relating to the contributions to the national social
Article 2; recovery was to be effected without delay and
security institution — Greece had failed to fulfil its obli
in accordance with the procedures of national law
gations.
( 6 ) OJ L 132, 28.5.2003, p. 1.
( 7 ) Not yet reported in the ECR.

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(29) On
23
May
2005
the
Commission
wrote
to
the
Greek
3. THE INITIATION OF THE PROCEDURE
authorities regarding the measures to be taken by Greece
to ensure compliance with the judgment of the Court of
The Commission decided to initiate the procedure laid down in
Justice.
Article 88(2) on a number of grounds:
(30) The
Greek
authorities
replied
by
letter
dated
2
June
3.1. THE COMPANY’S CONTINUED FAILURE TO PAY TAX
2005, reiterating their willingness to cooperate fully
AND SOCIAL SECURITY CONTRIBUTIONS
with the Commission in the matter. That reply will be
summarised below in so far as it relates to the matters
(33) Olympic
Airways
has
been
loss-making
since
2002.
Its
raised when the procedure was initiated.
profitability continues to be negative. Its core business,
rather than generating income, is reducing the overall
value of the company year on year. It is difficult if not
impossible to believe, therefore, that it has been able to
(31) The
aid
found
to
be
incompatible
in
the
2002
Decision
continue in business only because it has not been paying
has not yet been recovered. The Commission may bring
its debts to the State. In the 2002 Decision this failure to
an action under Article 228 of the EC Treaty for failure
collect debts was found to constitute illegal State aid.
to comply with the judgment.
(34) The Commission took the view, therefore, that the State
(32) The present Decision, however, concerns only the
was de facto if not de jure Olympic Airways’ principal
decisions or measures taken by the Greek authorities
creditor, and that if it were not for continued State inter
for the benefit of Olympic Airways and its successors
vention the company would long since have ceased
after the 2002 Decision was adopted.
operations.
3.2. THE STRUCTURAL REORGANISATION OF THE COMPANY
(35) When it initiated the procedure the Commission was aware of the existence of Law 3185/2003,
which provided that the flight divisions of the various companies within the old Olympic Airways
group, namely Olympic Aviation and Macedonian Airlines (‘Macedonian’), were to be hived off and
regrouped into a single entity, the former Macedonian, now renamed ‘Olympic Airlines’. The non-
flight divisions were to stay within Olympic Airways, now renamed ‘Olympic Air Services’. Law
3185/2003 provided that an identical procedure could be undertaken in respect of the ground
handling and maintenance and engineering divisions, although to date this has not been done.
(36) When it initiated the procedure the Commission took the view that Greece, having failed to privatise
the Olympic Airways group as a whole, had decided to divide it into separate units that would be
more attractive to potential investors, and to dissociate the units from Olympic Airways’ liabilities.

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(37) And
indeed
what
appears
to
have
happened
after
the
(40) Public
service
obligations
were
transferred
from
Olympic
restructuring of the Olympic Airways group is that
Aviation to Olympic Airlines without a public tender. It
since December 2003 all flight activities have been
appears that Olympic Aviation had secured the sum of
concentrated in the new Olympic Airlines, and all
EUR 10 million in debt to AIA airport on the earnings
other activities, principally ground handling and main
from these public service obligations, and that that loan
tenance and engineering, remain with the old company,
remained with Olympic Aviation, notwithstanding the
now called Olympic Air Services. Olympic Air Services
fact that the public service obligations were now to be
also retains a number of majority shareholdings in other
performed by Olympic Airlines.
aviation-related companies in Greece providing such
things as catering, information technology and fuel
services.
(41) Presidential
Decree
178/2002,
which
transposes
Council
Directive 98/50/EC ( 9 ) into Greek law, stipulates that in
the case of a transfer of an activity from one undertaking
(38) The
Privatisation
Law
specifies
that
the
transfer
of
assets
and liabilities and any other entitlements to the new
to another, by whatever method, employees connected
company is exempt from any tax, levy or fee payable
with that activity are to be transferred to the new under
to the State, to any legal person governed by public
taking on the same terms and with the same rights as
law or to any other public body. Such transfers are
before. It was the intention of the Greek authorities,
also exempt from any charge, debt or claim on the
however, to change the status of the employees. For
part of third parties, whether natural or legal persons,
this to happen, Presidential Decree 178/2002 required
with the exception of the obligations that are expressly
that negotiations take place.
mentioned in the conversion balance sheet. Additionally,
Article 27 of Law 3185/2003 stipulates that in respect of
debts that Olympic Airways contracted before the hive-
off of the flight division the new company is exempted
from the application of Articles 479 and 939 of the Civil
Code ( 8 ) and Articles 537 and following of the
Commercial Code. Following this measure, therefore,
(42) At
the
time
of
the
hive-off
there
were
almost
300
creditors will be able to bring claims only in respect of
specific laws, collective agreements or other provisions
debts that are transferred to Olympic Airlines, and will
applying to Olympic Airways staff as a whole. The
not be able to bring claims against the new company in
Greek authorities therefore considered it important to
respect of debts remaining with Olympic Airways.
modify the legislative framework and to renegotiate the
Subsequently, on 15 October 2004, the Greek authorities
collective agreements, especially as the group employed
enacted Law 3259/2004, which gave Olympic Airways
6 171 persons in June 2003 (approximately 1 850 staff
temporary immunity against enforcement proceedings
moved to Olympic Airlines), and personnel costs repre
brought by creditors.
sented 38 % of total revenue, when the average for the
industry was around 22–26 %. Consequently, Article 27
of Law 3185/2003 envisaged a number of changes. Law
2190/1994, which concerns the administrative
recruitment procedure for companies in the public
sector, would not apply to Olympic Airlines.
Employees who were entitled to retire in 2003 or
(39) In application
of Law 3185/2003, the Greek State
2004 under the applicable collective agreements would
engaged consultants Deloitte & Touche to determine
have their rights respected.
the value of the flight divisions of the Olympic
Airways group. The consultants were also asked to
prepare a restructuring plan and to draw up a report
on the state of Olympic Airways and Olympic Aviation
with a view to determining the number and type of
employees to be transferred to Olympic Airlines.
Deloitte & Touche indicated that they had not carried
out an audit and that they were working solely on the
(43) In
contrast
to
Olympic
Airways,
which
had
financed
its
basis of information provided by Olympic Airways and
operations exclusively from debt, it was intended that
Olympic Aviation management. Additionally, Deloitte &
Olympic Airlines would use its own funds. Olympic
Touche did not include in their evaluation the aircraft
Airlines began operations with little or no debt, and
owned by Olympic Airways and Olympic Aviation; the
this was due in no small part to the choice of the
value of the aircraft was calculated by another external
items transferred to the new entity. As regards liabilities,
consultant, Airclaims Ltd, at a market price of EUR 120
when it began operations the new company inherited no
million.
financial debt from the parent company, which was
indebted at that stage to the tune of EUR 207 million.
( 8 ) Both articles refer to the rights of creditors to protection in the
context of transfers of assets.
( 9 ) OJ L 201, 17.7.1998, p. 88.

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(44) Under
the
relevant
provisions
of
Greek
bankruptcy
law
EUR 26 001 473,33 in respect of the ‘tax for the
(Law 2190/1920), when a division, sector or department
modernisation and development of airports’, known as
is hived off and absorbed by an operational company,
‘spatosimo’, which was levied on passengers by air carriers
the shares in the operational company remain with the
and was to be forwarded by them to the State.
original company. What this means in this case is that
the shares in Olympic Airlines ought to have remained in
the ownership of Olympic Airways. However, Article 27
of Law 3185/2003 stipulates that within the framework
(48) It
also
appeared
that
the
Civil
Aviation
Authority
was
of the privatisation procedure all the shares deriving from
seeking payment of this EUR 26 million to it. It
the hive-off of the various divisions of Olympic Airways
therefore appeared that Olympic Airways, the main
are to devolve to the Greek State. Moreover, any monies
user of Greek airports, did not pay spatosimo, thus
resulting from the subsequent sale of these divisions will
obliging the State to find means to aid AIA, which was
be used to discharge Olympic Airways’ debts and obli
newly established and was dependant on spatosimo.
gations. Greece has indicated that by this procedure the
Although Olympic Airways was under an obligation to
financial assets are transferred to the State at a value that
repay the sums it owed at some time in the future, the
cannot be called into question, in so far as it is the
Commission suspected that in the meantime it was bene
product of an evaluation carried out by auditors.
fiting as a result of the forbearance of the State, which
Moreover, the Greek State considers that when they are
did not penalise it for late payment, but in fact set up
sold by the State these assets will generate a price higher
mechanisms whereby the other Greek airports had to
than they would have done if the shareholding had not
contribute in order to compensate for the losses occa
been transferred to it.
sioned by the late payment or non-payment by Olympic
Airways of the money it owed in spatosimo.
3.3. THE ‘ADVANCE’ OF EUR 130 312 450 TO OLYMPIC
AIRWAYS
4. COMMENTS RECEIVED DURING THE PROCEDURE
(45) By
Ministerial
Decree
2/71992/A0024
of
22
December
4.1. THE GREEK AUTHORITIES’ INITIAL COMMENTS
2003, enacted pursuant to Article 27 of Law 3185/2003,
the Greek State opened a special account at the Bank of
(49) On
11
June
2004
Greece
submitted
its
response
to
the
Greece entitled ‘Greek State — Denationalisation account
initiation of the procedure. It began by explaining that in
of the Olympic Airways group’. The account is to be
its opinion the most appropriate solution for Olympic
credited with the proceeds of any sale, within the
Airways was the privatisation of the various businesses
framework of the privatisation procedure, of companies
and operations of the group. The privatisation would
within the Olympic Airways group whose shares have
take place as quickly as practicable and in full compliance
been transferred to the Greek State (the first being
with all applicable rules and requirements of Greek and
Olympic Airlines). Nevertheless, to cover expenditure
EC law; the Commission would be kept fully informed of
necessary pending the privatisation of the companies
developments. Greece explained that privatisation was
within the group, the account was credited by the State
the most economically advantageous solution for the
with a sum described as an ‘advance’ (prokatavoli) or
authorities, as it would generate more money than
‘prepayment’ (propliromi). This advance is equal to
could be expected if the company were to be liquidated.
the nominal share capital of Olympic Airlines
While acknowledging that the privatisation option would
(EUR 130 312 450).
also have social and other non-economic benefits, the
Greek authorities emphasised that the economic
analysis was the only criterion for deciding on the
most appropriate strategy.
(46) Those
parts
of
Olympic
Airways’
liabilities
which
were
not transferred to the new Olympic Airlines, and
specifically the expenditure connected with the early
(50) Greece
referred
to
the
progress
that
had
already
been
retirement of certain staff, were to be financed out of
made in the privatisation process, which had been
the special account and from revenue generated by the
communicated to the Commission in advance. Greece
supply of services to Olympic Airlines and to third
confirmed that the flight operations of Olympic
parties.
Airways and Olympic Aviation had been hived off into
an existing company, Macedonian, along with a number
of intangible assets, such as slots, rights under bilateral
agreements, the brand name and logo, and Olympic
3.4. SPATOSIMO AND PAYMENTS TO AIA
Airways’ goodwill. Macedonian had changed its name
and had become Olympic Airlines. Ownership of
(47) By
letter
of
19
January
2004
a
complainant,
Aegean
Olympic Airlines’ shares (following a capital increase to
Airlines, forwarded to the Commission a copy of a
accommodate the contribution in kind of the flight
letter from the Greek Civil Aviation Authority to the
operations) had been transferred directly to the Greek
Auditor-General of the State, which had also been sent
State, thus taking Olympic Airlines out of the Olympic
to the Athens International Airport company AIA (ref.
Airways group. The new company had been granted all
DII/A/28751/11626 of 22 July 2003). It appeared from
necessary licences and had begun operations on
this letter that Olympic Airways owed the sum of
12 December 2003.

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(51) The
Greek
authorities
further
explained
that
the
strategic
market rates, because if the leases had been terminated
model for Olympic Airlines was the creation of a viable
early Olympic Airways would have had to compensate
scheduled air carrier, operating with industry average
the lessors for their losses. The operating leases would be
labour costs, which would be able to take advantage of
assigned directly to Olympic Airlines, thus taking
a number of factors including Olympic Airways’ strong
Olympic Airways out of the lease.
brand image, Greece’s position as one of the world’s 15
favourite tourist destinations, and the 2004 Olympic
Games in Athens. New management had been
appointed to Olympic Airlines and a thorough review
of the business plan was under way.
(57) The
leases
of
four
Airbus
A340-300
aircraft
partially
covered by State guarantees (up to 45 % of the
financing value) would not be assigned to the new
(52) Following Olympic Airlines’ commencement of
company. Olympic Airlines would operate these aircraft
operations Olympic Airways had ceased to be an EU
on a sublease basis, paying market rates to Olympic
licensed air carrier and had been renamed Olympic
Airways. In this way the Greek authorities contended
Airways Services. Olympic Aviation had also ceased
that no State benefit would pass to Olympic Airlines.
flight operations, with the exception of limited general
aviation and helicopter services, which were expected to
be transferred to the new company.
(58) On
the
State
guarantees
for
these
aircraft,
it
was
the
(53) With
respect
to
the
non-flight
operations
now
regrouped
contention of Greece that although the 2002 Decision
within Olympic Airways Services (ground handling,
declared that restructuring aid granted to Olympic
maintenance and engineering and aviation training),
Airways in several forms (including State guarantees)
Greece indicated that it intended to privatise these
was incompatible, the Commission had ordered the
activities also. This was provided for by Law 3185/2003.
recovery only of the last tranche of the restructuring
Any holdings in other companies, such as Olympic
aid granted, equal to EUR 41 million (as well as the
Catering and Galileo Hellas, were likewise to be sold.
recovery of unauthorised new aid), on the grounds of
Olympic Airways also had interests in three fuel
legitimate expectation. Greece maintained that as the
companies that operated at Athens International
2002 Decision did not provide specifically for the
Airport, namely Athens Airport Pipeline, Olympic Fuel
recovery (or cancellation) of State guarantees, it allowed
and Olympic IntoPlane, and it was anticipated that these
their continuation.
shareholdings would be sold off in a timely and orderly
manner. The sale of these companies would be relatively
easy, as they had ‘clean balance sheets’ and their private
shareholders had the right of first refusal to buy them.
(59) The
Greek
authorities
argued
that
the
transfer
of
public
service obligations was lawful, because the operation of
these routes formed an integral part of the flight activities
(54) The
Greek
authorities
wanted
to
clarify
a
number
of
issues relating to the restructuring that had been raised
of Olympic Aviation, and the routes continued to be
when the procedure was initiated.
operated with the same aircraft and same personnel as

the rest of the network.
(55) With
regard
to
the
agreements
between
Olympic
Airways
and Olympic Airlines, Greece asserted that all services
were provided at market rates and were in accordance
(60) Regarding
the
alleged
new
aid
to
Olympic
Airways,
the
with Olympic Airways’ generally applicable commercial
Greek authorities expressed some confusion as to what
policy. The Greek authorities undertook to transmit these
was meant by ‘tax obligations’. The Greek authorities said
agreements to the Commission.
that the Commission had failed to show that the Greek
authorities had ‘assisted’ Olympic Airways by tolerating
the non-payment of certain obligations (not only tax
obligations). They argued that it was for the Commission
to discharge the burden of proving such an allegation,
(56) With
regard
to
aircraft
leases,
Greece
stressed
that
the
which it had failed to do. The Greek authorities reiterated
only aircraft transferred to Olympic Airlines were those
that Olympic Airways was subject to the generally
fully owned by Olympic Airways. Aircraft leased by
applicable Greek law and procedures applicable to all
Olympic Airways were subleased to Olympic Airlines at
Greek companies in this regard.

---

L 45/8
EN
Official Journal of the European Union
18.2.2011
(61) Concerning
the
alleged
non-payment
of
the spatosimo tax,
belonged to the Olympic Airways group but to the State.
the Greek Government submitted that the relationship
As Olympic Airways had been deprived of the value of
between the air carriers, who collected spatosimo, and
its flight division, however, provision for an advance to
the Civil Aviation Authority, to which they forwarded
Olympic Airways which did not exceed the value of its
it, had to be distinguished from the relationship
‘lost’ property was a proportionate and adequate measure
between the Authority and the airports in Greece
for the purposes of restructuring and privatisation.
(including AIA), which received funding from spatosimo
calculated on the basis of the number of passengers
flown. Air carriers collected spatosimo from passengers,
and forwarded it to the State. Spatosimo levied but not
paid to the State constituted a debt to the State and was
(65) In the event that revenue from the sale of Olympic
subject to the general provision of the Code for the
Airlines was not enough to repay the advance of
Collection of Debts owed to the State (KEDE). This was
EUR 130 312 450, the shortfall would be made up
what had happened in the case of the sum of
from the sale of non-flight operations. Law 3185/2003
EUR 26
001
473,33 referred to, which Olympic
provided that the proceeds of the sale of these divisions
Airways had not paid on time but had paid off
were to be paid into the special account. In the event
subsequently, in instalments, with all the default
that the financial obligations of Olympic Airways
interest and penalties applicable.
exceeded the nominal value of the share capital of the

companies to be sold, Greek insolvency law would apply,
and creditors could make their respective claims
accordingly.
(62) The collection mechanism was separate from the
disbursement mechanism whereby the Greek State
(through the Civil Aviation Authority) paid money to
(66) Any
sums
from
the
proceeds
of
the
sale
which
exceeded
the airports. Although the two mechanisms were
the nominal value of the share capital of the companies
intended to operate back-to-back, one financing the
sold would remain with the State, and could not be used
other, the obligation on the Greek State to pay the
by Olympic Airways. Olympic Airways would have
airports was not dependant on its ability to collect the
access to the account only in order to meet its
sums due from the air carriers. As a result there had been
severance and retirement obligations and to cover the
situations where the State had been obliged to grant
financial obligations of Olympic Airways and Olympic
sums that had not yet been collected. While this was
Aviation during the course of the restructuring and liqui
unsatisfactory for the State, it did not amount to State
dation process.
aid, as the air carriers were not released from their obli
gation to pay (with default interest and penalties). In the
particular case referred to when the procedure was
initiated, cash flow constraints had obliged the Greek
(67) The
Greek
authorities
submitted
that
Law
3185/2003
State to alter the percentages of spatosimo allocated to
was an attempt to maximise shareholder value so as to
particular airports, granting more to AIA (which
maximise the recovery of the aid and the return on
resulted in a short-term reduction in the payments due
investment. Creditors would not be better protected by
to other airports). This was essential, as AIA’s financial
a bankruptcy.
situation was monitored by the European Investment
Bank and commercial lenders; the step was irrelevant
to the question whether Olympic Airways paid its dues.
(68) In the alternative, if the Commission were to take the
view that the advance was not consistent with what a
private market economy investor would have done to
maximise recovery and return on investment, the Greek
(63) The
Greek State said that this non-payment of the
authorities asked the Commission to consider whether in
spatosimo tax was the only evidence cited by the
the light of the rescue and restructuring guidelines the
Commission of the non-payment of Olympic Airways’
advance constituted rescue aid compatible with the
debts to the State.
common market under Article 87(3)(c). In that event
the Greek authorities would submit that the conditions
for the grant of rescue aid were met from December
2003 onward, and this would be substantiated by
providing business plans and the like.
(64) With
regard
to
the
special
account
provided
for
by
Law
3185/2003, the Greek authorities submitted that the
advance to Olympic Airways of the sum of
EUR 130 312 450 was a measure of a temporary
(69) On the question of possible aid to the future purchasers
nature, and was something that any prudent market
of any of the Olympic companies, the Greek authorities
investor would do. When the time came to sell
wanted to reassure the Commission that they intended to
Olympic Airlines, any sums advanced would be repaid
sell Olympic Airlines and any other divisions or busi
to the special account. The Greek authorities further
nesses at market prices, and in accordance with the
explained that the shares in Olympic Airlines no longer
applicable Greek and Community law.

---

EN
18.2.2011 Official
Journal
of
the
European
Union
L
45/9
(70) The
Greek
authorities
disagreed
with
the
conclusion
that
Preferential terms of payment between Olympic
in prohibiting any creditors of Olympic Airways from
Airways and AIA
bringing actions against Olympic Airlines the Greek
State was seeking to protect Olympic Airlines from the
(76) Aegean alleged that during the first year of operations at
enforcement of the 2002 Decision. They contended that
AIA, Olympic Airways had paid less than 30 % of its
this was not the intention, which was rather to maximise
debts to AIA, that agreements had been reached
recovery of investment. They explained that the
between AIA and Olympic Airways (which was AIA’s
operation of the special account was such as to ensure
largest individual customer, at 35 %), and that two
that amounts up to the nominal value of the share
preferred mortgages in favour of AIA had been registered
holding of Olympic Airlines were available to Olympic
on three Olympic Airways aircraft to secure payment of
Airways and its creditors, which ensured an adequate
sums in excess of EUR 29 million plus interest and
level of creditor protection. Greece emphasised that it
expenses. Olympic Airways’ overdue liability to AIA
was entitled to decide upon the most appropriate
was estimated by Aegean to be of the order of
means of restructuring and privatisation, and that it
EUR 70–80 million. Aegean alleged that AIA, which
was a legitimate step on its part to introduce a
was 55
% State-controlled, had allowed Olympic
safeguard to ensure that Olympic Airways’ creditors
Airways and Olympic Airlines to incur substantial
had at least the same level of protection as they would
liabilities, and that similar facilities were not available
otherwise have had. This protection of creditors should
to other airlines. Aegean estimated that if it had been
not be confused with the obligation to recover imposed
afforded the same facilities it could have had working
by the 2002 Decision.
capital of EUR 40–50 million at its disposal.
(71) Greece
also
disagreed
with
the
Commission’s
conclusion
that the creation of Olympic Airlines was not a solution,
as Olympic Airlines’ viability was not guaranteed: Greece
The financial performance of companies within the
stated that it was confident that Olympic Airlines would
Olympic Airways group
be successful.
(77) Aegean
stated
that
Olympic
Aviation
had
recorded
losses
of EUR 32,2 million, corresponding to 39 % of its
revenues of EUR 83 million, despite having received
(72) With respect to the proposed long implementation
EUR 8,2 million in compensation from the Greek State
period for the overall restructuring and privatisation,
for ‘early relocation’ of its activities from Ellinikon airport
Greece said that it noted the Commission’s concerns,
to AIA. Olympic Aviation’s debts to Olympic Airways
and would try to accelerate the process where practicable.
had grown from EUR 68 million in 2000 to EUR 127
Greece intended to provide the Commission with a new
million at the end of 2002. Olympic Airways had not
timetable for the implementation of the restructuring and
consolidated Olympic Aviation’s accounts in 2001 and
privatisation plan and the subsequent liquidation of
2002, and in Aegean’s view this was to make the parent
Olympic Airways.
company’s books look better.
(73) On the question of other laws providing Olympic
Airways with special exemptions or immunities, Greece
reiterated that the provisions of Law 96/1975 granting
(78) Aegean
also advanced some indications of Olympic
special privileges to Olympic Airways (in the areas of
Airways’ profitability in 2003. According to publicly
payment of duties on transactions and exemption from
available traffic information, Olympic Airways’ traffic
payment of stamp and traffic duties and with regard to
had declined by 8 % in 2003, while its load factor had
State guarantees) had been repealed, and that Olympic
declined by 5 %. The decline was most pronounced on
Airways was subject to all generally applicable taxes and
its European network, where there had been a fall of
duties and operated in the context of a free market
14,4 %; the number of business passengers had fallen
economy.
by 26 %. In Aegean’s opinion this decline in passenger
numbers together with an increasingly difficult market
(fuel price increases, increased competition from low-
4.2. COMMENTS SUBMITTED BY THIRD PARTIES
cost carriers) meant that the Olympic Airways group’s
financial position must have deteriorated through 2003.
(74) Following
the
publication
in
the Official Journal of the
European Union of the letter addressed to the Greek
authorities, comments were received within the time
allowed from two other interested parties.
Possible subsidisation of Olympic Airlines through
non-payment of debts to Olympic Airways Services
4.2.1. AEGEAN AIRLINES
(79) Aegean
voiced
its
suspicion
that
the
new
company
was
(75) The
first
set
of
comments
was
submitted
by
a
Greek
air
not paying for the services that it received from Olympic
carrier, Aegean Airlines (‘Aegean’). Aegean made the
Airways Services, or at least was not paying what it
following observations.
ought to pay.

---

L 45/10
EN
Official Journal of the European Union
18.2.2011
(80) According to Aegean the advance of EUR 130 312 450
EUR 1 billion, and yet Olympic Airways had been
million lodged to the special account had been exhausted
required to repay only EUR 200 million to the Greek
after eight months.
State. Other airlines had been forced to subsidise the
failing national carrier through higher airport charges
because Olympic Airways had been granted a ‘holiday’
from these charges. In Ryanair’s opinion the continued
illegal support given to this failed national airline
(81) A new law had been adopted (Law 3259/2004)
seriously undermined the potential for new and more
protecting Olympic Airways Services and Olympic
efficient operators to enter the market. The creation of
Aviation from having enforcement proceedings brought
a new, debt-free airline was unacceptable; Ryanair
against them. Under this law no enforcement or interim
wondered whether the procedures in force under
relief proceedings could be brought inside or outside
Article 4 of Council Regulation (EEC) No 2407/92 of
Greece in respect of the movable or immovable assets
23 July 1992 on licensing of air carriers ( 10 ) had been
of Olympic Airways Services or Olympic Aviation before
followed with regard to the application for an operating
28 February 2005. The law seemed to have been adopted
licence for the new company. In conclusion, Ryanair
because certain creditors had seized an Airbus 300-600
stated that the Greece should not be permitted to
aircraft and were threatening to sell it to settle their
circumvent the rules once again and to continue to
claims.
prop up its failed national airline.
(82) Aegean
complained
that
the
Greek
State
had
awarded
Olympic Aviation’s public service obligation routes to
4.3. GREECE’S REPLY TO THIRD-PARTY COMMENTS
Olympic Airlines automatically, without a public tender.
In addition, all of Olympic Airways’ rights in respect of
(87) Greece took the view that the information contained in
traffic to non-EEA States had been taken over by the new
the comments submitted by third parties was inaccurate
company without any reassessment of the criteria for
and contributed nothing new to the investigation. The
designation, although other airlines, including Aegean,
Greek authorities repeated that the previous privatisation
had expressed an interest in being designated.
process for the airline had been terminated on 6 October
2004, and that a new group of advisers had been
appointed for the privatisation of both Olympic
Airlines and the other businesses or divisions. The new
group of advisers had already commenced work, and
(83) Aegean was of the opinion that the transfer of assets to
progress was being made on the ‘proposal phase’. An
Olympic Airlines without the corresponding liabilities
indicative timetable for the privatisation had also been
might be incompatible with both the Treaty and the
drawn up.
Greek Constitution.
(84) According
to
press
reports
Macedonian
had
accumulated
(88) On the specific comments made by the third parties,
tax liabilities of GRD 3,5 billion before it was converted
Greece replied as follows.
into Olympic Airlines; Aegean alleged that the Greek
State had not made any claim against Olympic Airlines
in respect of this sum.
4.3.1. AEGEAN AIRLINES’ COMMENTS
(89) The
issue
of
the
alleged
preferential
treatment
of
Olympic
4.2.2. RYANAIR
Airways at AIA had been addressed before in the context
(85) Comments
were
also
received
from
the
Irish
low-cost
of the present State aid investigation, before the Court of
airline Ryanair. Ryanair made a number of general obser
Justice (Case C-415/03 Commission v Greece), and in other
vations regarding the application of Community State aid
State aid investigations (Case NN 27/1996 Construction
rules in Member States other than Greece and in relation
and exploitation of Athens International Airport). Although
to airlines other than Olympic. With regard to the case in
AIA was 55 % State-owned, it was operated as a private
hand, Ryanair noted at the outset that it was unable to
business independent of State control in its day-to-day
comment on the letter sent to the Greek Government,
operations. It therefore had sole responsibility for the
because no English translation had been provided.
collection of airport charges and for the settlement
arrangements for late payment. Of the nine directors of
AIA, four were appointed by the State and four by the
developers, and the remaining one was an independent.
Greece reiterated that it had already clarified the issues
(86) Ryanair went on to say that in the original investigation
relating to late payment of spatosimo.
against Olympic Airways the amount of State aid found
to have been received by Olympic Airways was over
( 10 ) OJ L 240, 24.8.1992, p. 1.

---

EN
18.2.2011 Official
Journal
of
the
European
Union L
45/11
(90) As
regards
the
possible
subsidisation
of
Olympic
Airlines
Olympic Airways; the last instalment was paid in May
through non-payment of debts to Olympic Airways
2004, and the reimbursement was to be carried out
Services, the Greek authorities stated that all services
after privatisation of Olympic Airlines in May 2005;
provided by Olympic Airways Services to Olympic
Airlines were provided on market terms and conditions.
The Greek authorities provided some documentary
evidence of payments made by Olympic Airlines to
— the grant of rescue aid avoided serious and severe
Olympic Airways.
social difficulties throughout Greece;
(91) More generally, Greece provided documentation in
— Olympic Airways would cease to be an air carrier,
support of its assertion that Olympic Airlines had no
and would operate non-flight services only, so that
payments outstanding with any State entity. It supplied
the adverse effects in other Member States would be
evidence of up-to-date payments to the tax authorities in
limited;
respect of salaried persons tax (FMY), VAT, airport
charges (at AIA and elsewhere), spatosimo and social
security contributions (IKA).
— the amount of the advance was necessary to keep the
company in business for the limited period for which
it was granted; the amount was proportionate and
(92) Greece
stated
that
the
sums
in
the
special
account
were
was comparable to the amounts of rescue aid auth
being used in accordance with Law 3185/2003. The
orised by the Commission for other undertakings of
advance paid into the account was a measure of a
similar size or undertakings operating in the same
temporary nature that any prudent market investor
industry.
would have taken. The advance had been used
primarily for salaries in both Olympic Airways and
Olympic Aviation, aircraft leasing costs, and early
retirement of Olympic Airways and Olympic Aviation
(95) In
Greece’s
opinion
the
new
law
protecting
Olympic
staff.
Airways Services and Olympic Aviation from

enforcement proceedings (Law 3259/2004) was
necessary to ensure the privatisation process. This
temporary measure did not deprive creditors of their
(93) Olympic
Airlines
had
received
no
funds
from
the
special
rights, but suspended enforcement proceedings for a
account, either directly or indirectly. The Greek
limited period. The temporary protection from creditors
authorities also strenuously denied the allegation that
that it provided did not apply against the Greek State or
when it was established Olympic Airlines had not
other public bodies, and applied only to Olympic
inherited any liabilities.
Airways and Olympic Aviation. The measure did not
constitute State aid, as it involved no transfer of State
resources. (Under Law 3185/2003, following the hive-off
creditors would be able to bring proceedings against
(94) The sum of EUR 130 312 450 had been granted in
Olympic Airlines only in respect of debts transferred to
instalments between 24 December 2003 and 13 May
Olympic Airlines.)
2004 (a period of less than six months). It was paid
out in this way so that if the Commission were to
decide that it constituted State aid within the meaning
of Article 87(1) of the Treaty, the conditions it needed to
Public service obligations and designations under
meet in order to qualify as rescue aid would all be met.
bilateral agreements
In support of its contention that the advance would
qualify as rescue aid, Greece drew attention to the
(96) Greece took the view that the transfer to Olympic
following:
Airlines of public service obligations and bilateral desig
nation rights had taken place by virtue of rights of
succession in accordance with Greek corporate law. The
routes in question had been operated either by Olympic
— Olympic Airways was a company in difficulty within
Airways or by Olympic Aviation, and the flight divisions
the meaning of the rescue and restructuring
of these companies had been transferred to Olympic
guidelines;
Airlines.
— the advance to Olympic Airways constituted liquidity
(97) With
reference
to
the
allegation
that
Macedonian
had
an
support;
outstanding tax bill of GRD 3,5 billion, Greece explained
that an outstanding tax bill relating to the period 1993-
1997 was the subject of litigation in the courts. Including
charges and penalties, the amount at issue was
— the sums advanced in liquidity support were expected
EUR 9 106 481,75; the case was still ongoing. Pending
to be reimbursed over a period of not more than 12
the outcome of the proceedings the company had made
months after disbursement of the last instalment to
appropriate provision for the liability in its accounts.

---

L 45/12
EN
Official Journal of the European Union
18.2.2011
4.3.2 RYANAIR’S COMMENTS
questions relating to the restructuring and proposed
privatisation that form the subject matter of the current
(98) Greece
rejected
Ryanair’s
comments
completely:
it
said
investigation.
that Ryanair was not active on the Greek market, did
not compete with Olympic Airlines, and was using the
proceedings to advance arguments relating to its own
ongoing debate with the Commission.
(103) In the first place, the Greek authorities wanted to raise
certain issues relating to the recovery of aid from
Olympic Airways. The Greek authorities said that
according to paragraph 33 of the Court judgment ‘the
4.4.
operation in issue transferred all the assets of the
COMMENTS SUBMITTED BY GREECE FOLLOWING
company Olympic Airways … to the new company
RECEIPT OF THE LETTER GIVING FORMAL NOTICE OF A
Olympic Airlines’, but that that was not correct, and
SUSPENSION INJUNCTION
that several important assets remained with Olympic
(99) On
11
October
2004
the
Commission
sent
a
letter
Airways, which continued to be active in several markets.
giving Greece formal notice that it proposed to issue a
suspension injunction requiring Greece to suspend any
illegal aid until a decision could be taken on its compati
bility. The letter informed Greece that it intended to
(104) The companies within the Olympic Airways group were
adopt such an injunction if within ten days of the date
in the process of being privatised, and details of this
of receipt of the letter it did not receive satisfactory
privatisation had already been given to the Commission
information demonstrating that Greece was no longer
departments. The Greek authorities intended to comply
making aid payments to the beneficiaries. Greece was
fully with the recovery requirement, and when the assets
asked to submit its comments on the matter.
of Olympic Airlines had been sold the proceeds would
go directly to the Greek State. If those proceeds were not
enough to cover the sums that had to be recovered, use
would be made of the proceeds of the sale of Olympic
Airways group companies lodged in the special account
(100) The Greek authorities replied to this letter of formal
in the name of the Greek State. Once all these avenues
notice on 28 October 2004. Greece argued that issuing
had been exhausted it was the intention of the Greek
an injunction at this stage would be disproportionate and
authorities to liquidate Olympic Airways.
unjustified, and would seriously jeopardise the intensive
efforts Greece was making to find a solution to the
companies’ difficulties. With regard to the substantive
issues raised in the Commission’s letter, they said that
as Olympic Airways was no longer an air carrier it no
(105) In the event that the sales from Olympic Airlines were
longer collected the spatosimo tax. On the ‘special
not sufficient to meet the recovery requirement, Greece
undertook that no general or special provision of Greek
account’, and the payment of EUR 130 312 450 to
law would protect the ‘successor companies’ (expressly
Olympic Airlines from that account, they said this was
including Olympic Airlines) from the obligation to
the act of a prudent investor, or possibly a payment of
reimburse the aid as required by the 2002 Decision.
rescue aid. They could not see the need for a suspension
injunction at this stage of the investigation: there had
More specifically, regarding the special provision of
been no significant change in the circumstances since
Law 3185/2003 which granted protection from
the procedure had been initiated, and there was no
creditors to Olympic Airlines in respect of debts
evidence of substantial and irreparable damage that
incurred by Olympic Airways before the restructuring,
might warrant the adoption of such an injunction.
the letter continued ‘not even the Greek State can
bring a claim against Olympic Airlines for debts of
Olympic Airways’, and repeated Greece’s view that the
primacy of Community law meant that in respect of
recovery this provision could not frustrate the application
of the Commission Decision and of the Community rules
4.5. COMMENTS SUBMITTED BY GREECE FOLLOWING THE
on State aid.
JUDGMENT IN CASE C-415/03 COMMISSION V GREECE
(101) As previously mentioned, the Commission wrote to the
Greek authorities on 23 May 2005 seeking information
on the measures to be taken by Greece to comply with
(106) The Greek authorities said that the purpose of the
the judgment of the Court of Justice in Case C-415/03
provision was to protect Olympic Airlines during the
Commission v Greece.
restructuring process, rather than to protect it from a
possible obligation to recover the aid in accordance
with the 2002 Decision. In the event that full recovery
could not be made at the level of the Olympic Airways
group, a potential future liability for recovery resting
(102) The Greek authorities replied by letter dated 2 June
with Olympic Airlines would in Greece’s opinion not
2005; that letter was concerned primarily with the
be possible if the successor company was sold at a
issue of recovery following the 2002 Decision, but it
reasonable market price in the light of the Commission
will be considered here in so far as touches on
guidelines on privatisation.

---

EN
18.2.2011 Official
Journal
of
the
European
Union L
45/13
5. RESULTS OF THE EXPERT STUDY REQUESTED BY
1 October 2003 by an international airline consultant,
THE COMMISSION
Airclaims Ltd, and resulted in an increase of
approximately EUR 43,2 million over the existing
(107) Before the Commission could assess the points raised
written-down value.
when the procedure was initiated, and the information
supplied by the Greek authorities and the third parties, it
considered it necessary to review the current economic
and financial situation of Olympic Airways (Olympic
Airways Services) and Olympic Airlines, and the
(112) The experts pointed out that the opening balance sheet
progress that had been made with restructuring and
for Olympic Airlines contained no allowance for
privatisation.
doubtful debts against trade receivables. Whilst Olympic
Airlines management was confident that all the balances
transferred would be collected, the experts felt that it was
unrealistic to assume zero bad debts. A further figure of
EUR 825 020 labelled ‘doubtful accounts receivable’ was
included in Macedonian’s conversion balance sheet. The
(108) To this end the Commission engaged the services of
experts were of the opinion that it was imprudent to
independent experts, Moore Stephens, to carry out a
include this as an asset.
study of the restructuring, operations and privatisation
to date of the various companies in the Olympic
Airways group and to submit its findings on what had
happened since the restructuring.
(113) Olympic Airlines’ opening balance sheet contained an
asset of EUR 7,9 million from Olympic Airways,
estimated by management, which had previously been
a debt owed to Macedonian. The corresponding liability
had not been transferred to Olympic Airlines because of
the provisions of Law 3185/2003 that allowed liabilities
(109) Moore Stephens (‘the experts’) carried out their study in
Athens between 9 and 26 May 2005. They were
to be retained by Olympic Airways.
facilitated by the Greek authorities and their advisers,
and also by the fact that a data room had been
prepared by the authorities and their privatisation
advisers so that potential purchasers involved in the
(114) The opening balance sheet indicated a sundry debtor
privatisation process could carry out their own research.
item of EUR 24,4 million, which related to a sum due
from Olympic Airways in respect of the expected net
proceeds of the sale of two A300-600 aircraft owned
by Olympic Airways which remained on its balance
sheet and which were leased to Olympic Airlines. The
inclusion of this item was not in accordance with Greek
5.1. EXPERT CONCLUSIONS RELATIVE TO THE RESTRUC
or international GAAP, as it related to a sale that had not
TURING
yet occurred of a fixed asset not owned by the company.
As Olympic Airlines appeared to have borne the costs
(110) The experts examined the restructuring operation and the
and enjoyed the benefits of these aircraft, the aircraft
way in which the assets and liabilities to be transferred to
might have been transferred to Olympic Airlines with
Olympic Airlines and to remain with Olympic Airways
the other owned aircraft at their book value of
had been evaluated; they indicated that certain entries
EUR 19,2 million.
were not in accordance with either Greek or international
generally accepted accounting principles (GAAP). They
indicated that a figure of EUR 30 million for goodwill
had been recognised on Olympic Airways’ balance sheet
prior to the restructuring. This figure was a valuation, by
(115) The experts confirmed that the Olympic Airlines balance
management, of the Olympic brand name, the Olympic
sheet excluded most of the flight operations liabilities of
logo, the Olympic Airlines trademark, and slots and
Olympic Airways and Olympic Aviation. Under Greek
bilateral agreements. Neither Greek nor international
company law, when activities were hived off as part of
GAAP allowed internally generated intangible fixed
a company restructuring all the related assets and
assets or goodwill to be recognised on the balance sheet.
liabilities had to be transferred. Whilst there was an
inevitable degree of subjectivity in such an exercise, the
legislation did not give management the option to be
selective in the assets and liabilities transferred. Law
3185/2003, however, contained provisions that
permitted the Olympic Airways group management to
(111) Another possible point of concern related to the
override the normal requirements of the legislation and
valuation of aircraft. At the time of the hive-off,
selectively to exclude liabilities from the hive-off.
aircraft and aircraft engines owned by Olympic Airways
Management had taken advantage of Law 3185/2003
and Olympic Aviation had been revalued at current
to exclude from the hive-off all liabilities over one
market value. This exercise was carried out at
month old.

---

L 45/14
EN
Official Journal of the European Union
18.2.2011
(116) The experts carried out a comparison between the liabilities transferred and those left behind by
comparing extracts from the opening balance sheet of Olympic Airlines at 11 December 2003 with
the year-end balance sheets of Olympic Airways and Olympic Aviation at 31 December 2003
(Olympic Airways and Olympic Aviation did not prepare balance sheets at 11 December 2003).
BALANCE SHEET EXTRACTS Olympic
Airlines Olympic
Airways Olympic
Aviation
11 December 2003 31
December
2003 31
December
2003
Provision for termination
Provision for
33 922 469 82
035
663 10
534
535 Note
1
retirement benefits
Other 7
616 89
230
530 709
865 Note
1
33 930 085 171
266
193 11
244
400
Long-term debt
Bank loans
— 148
036
005
— Note
2/Note
1
Other long-term debt
— 1
018
427
— Note
1
— 149
054
432
—
Short-term liabilities
Suppliers 31
019
022 89
067
738 148
671
366 Note
1
Banks, short-term liabilities
— 14
504
809
— Note
3/Note
1
Customers’ advances 824
482
— 392
413 Note
1
Taxes and duties
4 045 699 373
549
262 719
901 Note
1
payable (including
airport duties)
Social security, contributions
2 495 142 147
554
360
— Note
1
payable
Current portion of long-term
Note 2/Note 1
debt
— 22
986
786
—
Dividends payable 514
739
—
—
Amounts owed to
— 4
745
844
— Note
1
affiliated undertakings
Other creditors 7
009
156 65
838
943 617
392 Note
1
Prepaid tickets 32
288
005
—
—
78 196 245 718
247
742 150
401
072
Accruals and deferred
income
Accrued expenses
— 49
642
845 751
674 Note
1
Sundry accruals and deferred
— 57
328
943 17
664
167 Note
1
income
— 106
971
788 18
415
841
TOTAL LIABILITIES 112
126
330 1
145
540
155 180
061
313
Note 1: Liabilities retained in accordance with Law 3185/2003.
Note 2: ABN Amro loan.
Note 3: Emporiki Bank loan settled with proceeds EUR 130 million, February 2004.

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EN
18.2.2011 Official
Journal
of
the
European
Union L
45/15
(117) The experts showed that no long-term liabilities and less
(119) In the case of Macedonian, a tax provision amounting to
than 10 % of the short-term liabilities had been trans
EUR 9,1 million, relating to the findings of a tax audit
ferred to Olympic Airlines. The total liabilities transferred
covering the years 1992-1997, had been excluded from
to Olympic Airlines (EUR 145 million) were just 9,9 % of
the balance sheet. No tax provision had been made for
the total liabilities of the three companies (EUR 1 471
Macedonian for the years 1998–2003. A tax department
million). The short-term liabilities transferred to Olympic
audit had not yet been carried out. Management had not
Airlines (10 % of total short-term liabilities) were those
made any provision because they believed there would be
less than one month old.
no tax liability on profits for the period. Macedonian had
made a profit in 2001, 2002 and 2003.
(118) The largest liabilities left behind with the Olympic
(120) The experts concluded that the assets transferred to
Airways group were tax and social security liabilities to
Olympic Airlines had been overvalued. They carried out
the State amounting to EUR 521 million. The experts
their own valuation of the assets transferred, and
reported that in leaving most of the liabilities behind in
concluded that the figure arrived at by the management
the Olympic Airways group, Olympic Airlines
of the Olympic Airways group (EUR 130 312 459),
management’s stated intention was to enable the
which had not been validated by an independent
airline, in its new guise as Olympic Airlines, to
auditor, was significantly overvalued, in their opinion
continue trading and to proceed to privatisation. They
by more than EUR 90 million. Using accounting tech
concluded that if the Olympic Airways group
niques recognised under Greek and international GAAP
management had transferred the full liabilities of the
the experts restated Olympic Airlines’ balance sheet to
flight divisions to Olympic Airlines, the new company
reflect the issues described above, to the extent that
would have faced the same liquidity problems as the
they could be quantified: the result was that the value
Olympic Airways group, which would almost certainly
of the net assets transferred to Olympic Airlines was
have led to the insolvency and closure of the airline. To
reduced from EUR 130 million to EUR 38 million.
put it another way, the restructuring exercise would have
Even allowing for a certain level of subjectivity in the
served no purpose if the full liabilities of the flight
valuation, they said, it was difficult to explain the
divisions of the Olympic Airways group had been trans
discrepancy between the two figures; they concluded
ferred with the assets.
that Olympic Airlines was overvalued ( 11 ).
Adjusted
Item
Opening balance
Adjustment
sheet (EUR)
(EUR)
balance sheet
Explanation
(EUR)
1. Goodwill 30
000
000 (30
000
000)
— Remove
internally
generated
goodwill
2. Owned
aircraft 124
599
144 (43
200
000) 81
399
144 State
aircraft
at
written-down
value
3. Trade
receivables 51
336
137 Management Management Remove doubtful trade
estimate
estimate
receivables
4. Amount due from 7 904 245 (2
904
245) 5
000
000 Restate
Olympic
Airways
debt
Olympic Airways
at actual amount
5. Receivables
(Macedonian) 825
020 (825
020)
— Remove
doubtful
receivables
(Macedonian)
6a. Sundry debtors 24
674
196 (24
674
196)
— Remove
debt
relating
to
future
disposal of aircraft
6b. Owned aircraft
— 19
175
961 19
175
961 Include
aircraft
to
be
sold
at
book value
7. Payables > 1 month
— Management
Management Include payables > 1 month
estimate
estimate
8. Tax
provision
1992–1997
— (9
106
482) (9
106
482) Include tax provision (Mace
donian) 1992–1997
9. Tax
provision
1998–2003
— Management
Management Include tax provision (Mace
estimate
estimate
donian) 1998–2003
Total (91
533
982)
( 11 ) The experts observed that this exercise was not an audit of the
opening balance sheet, and that the adjustments made did not
necessarily include all those that would be required if an audit
were to be carried out.

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L 45/16
EN
Official Journal of the European Union
18.2.2011
(121) The experts reported that Olympic Airlines’ opening
the net assets transferred and, in turn, the nominal value
balance sheet and the conversion balance sheets had
of the share capital of Olympic Airlines was EUR 130
been compiled by the company’s accountants, Deloitte
million. The Greek Government had paid this sum to
and Touche, from information provided by management,
Olympic Airways in accordance with Law 3185/2003.
but had not been audited or otherwise independently
assessed. Under ordinary Greek company law inde
pendent auditors would have to provide an opinion
with words to the effect that the figures in the
conversion balance sheets were properly extracted from
(125) The experts concluded that if recognised accounting
the company’s underlying accounting records. However,
practices had been applied, Law 3185/2003 would
Law 3185/2003 allowed Olympic Airlines to forgo this
have permitted the Greek Government to make only a
exercise, and required only that the auditors draw up the
much smaller contribution to Olympic Airways.
balance sheets, without having to provide an opinion on
Considering the cash position of Olympic Airways and
them.
Olympic Airlines at the time of the restructuring, such a
reduction in the cash available from the Government
would have had significant implications for the ability
of Olympic Airways and Olympic Airlines to continue
trading.
(122) The experts could not say whether Deloitte and Touche
had indeed drawn up the balance sheets, or whether they
had been drawn up by management. Deloitte and
Touche’s report on their work was a descriptive report
(126) They further concluded that the final outcome of the
explaining the make-up of the balance sheets, in which
hive-off, privatisation and asset sale process was that
they emphasised that ‘no audit or other independent
the Olympic Airways group would be left with no
examination was carried out by ourselves’ and that the
trading activities, with minimal assets and with debts
conversion balance sheets remained ‘the full, absolute
amounting to hundreds of millions of euro. The
and exclusive responsibility’ of management.
insolvency rules in Greek law were likely to be applied
to Olympic Airways and Olympic Aviation, which would
be placed in liquidation. The costs would be borne by the
creditors, principally the Greek State.
(123) The experts concluded that in addition to the questions
of proper accounting treatment set out in the previous
finding, there was an overall lack of assurance over the
5.2.
opening balance sheet figures, because of the absence of
EXPERTS’ CONCLUSION ON OLYMPIC AIRWAYS
an audit or other independent control over the exercise.
(OLYMPIC AIRWAYS SERVICES) AFTER RESTRUCTURING
In support of this conclusion, the experts also referred to
(127) The experts examined the situation of Olympic Airways
the auditors’ report on the financial statements of
(Olympic Airways Services) following on from the
Olympic Airlines for the year ending on 31 December
Decision of 11 December 2003. The company had
2003, two and a half weeks after the opening balance
continued to make losses, which had eaten away at its
sheet, where the auditors expressed reservations in
capital and reserves and had severely hampered its
respect of the company’s opening balances. The
borrowing possibilities.
auditors stated that they were not in a position to
confirm the value of goodwill, fixed assets at valuation
and the debtors and creditors transferred from the
component companies to Olympic Airlines, and
therefore did not express an opinion on them.
5.2.1. OLYMPIC AIRWAYS’ (‘OLYMPIC AIRWAYS SERVICES’)
TAX AND SOCIAL SECURITY SITUATION
(128) The experts found that Olympic Airways’ balance sheet
contained large tax and social security liabilities. These
had been increasing year on year, as payments to the tax
(124) Law 3185/2003 provided for a cash advance from the
authorities had not matched annual liabilities. The tax
Greek State to cover the financial obligations of Olympic
liability related mainly to employee payroll tax dating
Airways and Olympic Aviation in the course of the
back several years and also included airport tax, VAT
conversion and liquidation procedure; this sum was
and profits tax liabilities. Under the hive-off of flight
based on the nominal value of the shares of Olympic
operations to Olympic Airlines, only one month’s tax
Airlines. The experts concluded that it was in the
and social security liabilities had been transferred to the
interests of the Olympic Airways group […] (*) to
newly created entity. The social security liability related
maximise Olympic Airlines’ opening share capital by
primarily to the company’s main pension fund. In 2003
maximising the value of transferred assets and mini
and 2004 the liability had increased by a total of
mising the value of transferred liabilities. The value of
EUR 137 million. In this period the company made
payments of EUR 7,7 million under an agreement to
(*) Covered by the obligation of professional secrecy.
settle debts for years prior to 2003.

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EN
18.2.2011 Official
Journal
of
the
European
Union L
45/17
(EUR million)
(133) The experts found that the transfers had been made at
2002 (*) 2003
(*) 2004
(**)
times when Olympic Airways’ bank account was short of
funds. A pattern was evident in which the State transfers
Taxes 219 374 431
were utilised gradually over a period of weeks as cash
receipts from other sources fell short of cash payments
Social security 54 148 196
out. At the point that the bank account was close to
running out of funds, another transfer was made and
Total 273 522 627
the process was repeated.
(*) Figures from audited financial statements (qualified).
(**) Draft, unaudited figures from Olympic Airways accounting records.
Note: Figures for 2005 are not available, as Olympic Airways’ accounting
records have not been updated beyond 31 December 2004.
Date of transfer EUR
(129) The experts noted that the Olympic Airways audit report
24 December 2003 32
960
288
for 2003 stated that the company’s books and records
had to a great extent failed to comply with the provisions
14 January 2004 10
091
143
of tax legislation. The audit report also stated that the tax
audit for the years 1998 and 1999 had concluded that
30 January 2004 35
356
335
the books and records were inadequate, and that since
the company had not been audited by the tax authorities
13 February 2004 10
000
000
for the years 2000 to 2003 inclusive, its tax obligations
for the years 1998 to 2003, inclusive, were not final.
8 April 2004 8
000
000
22 April 2004 12
000
000
13 May 2004 21
904
693
(130) The experts concluded that Olympic Airways had a
history, going back several years, of not paying its
Total 130
312
459
taxation and social security liabilities in full. At the end
of 2002 the total liability was already large, at EUR 273
million, and it had continued to grow significantly over
the period since then. The estimated liability at the end
of 2004, at EUR 627 million, was over 75 % of the
combined annual turnover of Olympic Airlines and the
(134) Using this payment schedule and information provided
Olympic Airways group for 2003. They added that the
by Olympic Airways. management […]. The experts
underpayment of tax liabilities by Olympic Airways had
ascertained that Olympic Airways management
provided a cash flow benefit to Olympic Airways both
appeared to have interpreted the concept of retirement
before and after restructuring.
and other restructuring expenses in the broadest possible
sense, so as to cover any kind of spending by Olympic
Airways in the period between the hive-off of Olympic
Airlines and the completion of privatisation. It was not
easy to verify the analysis of the purposes for which
Olympic Airways had used the money, because the
5.2.2. THE EUR 130 312 459 TRANSFERRED TO OLYMPIC
funds from the special account were not differentiated
AIRWAYS (OLYMPIC AIRWAYS SERVICES)
from any other funds received into the company’s
main bank account, but Olympic Airways management
(131) The Greek Government made cash transfers totalling
indicated to the experts that the funds had been spent as
EUR 130 312 459 to the Olympic Airways group in
follows:
seven instalments between 24 December 2003 and
13 May 2004. These were examined by the experts to
see how they were paid and what they were subsequently
used for.
Expense category EUR
Aircraft leasing 51
012
257
(132) The money was paid under Law 3185/2003, and was
Retirement payments 29
953
077
based on the nominal value of the share capital in the
newly established Olympic Airlines. According to the
Payroll 34
407
994
Law, the sum was ‘to cover severance payments and
other expenses for the retirement, in whatever manner,
Repayment of loan — Emporiki Bank 14
939
131
of the employees, and to cover the financial obligations
of Olympic Airways and Olympic Aviation in the course
Total 130
312
459
of the conversion and liquidation.’

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L 45/18
EN
Official Journal of the European Union
18.2.2011
5.2.3. REPAYMENT BY GREEK STATE OF PART OF ABN
5.2.4. FINANCE LEASING OF AIRCRAFT (A340s)
AMRO BANK LOAN TO OLYMPIC AIRWAYS
(140) In their review of Olympic Airways’ accounts the experts
(135) On 9 February 2001, Olympic Airways entered into a
found that on 24 September 2004 the Greek State had
loan agreement with ABN Amro Bank for a loan of EUR
made lease payments totalling EUR 11 774 684 as
182 198 160 to finance the relocation of Olympic
guarantor under two finance lease agreements with
Airways to the new Athens International Airport.
Crédit Lyonnais for two A340 aircraft. The payments
related to the six-monthly instalment due on 29 July
2004 under the lease contracts for the aircraft.
(136) The loan was repayable in 16 six-monthly instalments of
EUR 11 387 385 each, plus interest, between 9 August
2003 and 9 February 2011, and was backed by a State
(141) The experts found that the Government had asked the
guarantee that entitled ABN Amro to demand fulfilment
Greek tax authorities to recover the money from
of Olympic Airways’ payment obligations directly from
Olympic Airways. The tax authorities had submitted
the State.
debit notes to Olympic Airways requesting payment.
The amount was recorded in Olympic Airways’ books
as a liability to the tax authorities, but had not yet
been repaid.
(137) Under the terms of the hive-off of flight operations to
Olympic Airlines on 11 December 2003, the loan
remained as a liability in Olympic Airways’ accounts.
5.2.5. DIRECT CASH FUNDING OF OLYMPIC AIRWAYS BY
By 31 December 2003, Olympic Airways had paid one
THE STATE
scheduled instalment of the loan, and the liability in
Olympic Airways’ balance sheet was EUR 170 810 775.
(142) The experts also found that on 9 August 2004 the Greek
State had made a cash payment of EUR 8,2 million to
Olympic Airways. This sum had been paid by the State
as an advance to Olympic Airways against money that
Olympic Airways had paid into an escrow account, as a
guarantee for finance lease payments to Crédit Lyonnais
(138) In their review of Olympic Airways’ accounting records
for two A340 aircraft. Crédit Lyonnais had agreed to
the experts found that ABN Amro had invoked the
allow the money to be released from the escrow
Government’s guarantee in respect of the second, third
account upon completion of the transfer of the aircraft
and fourth instalments of the loan. As a consequence the
lease contracts from Olympic Airways to the State (by
Greek State had paid the following instalments on behalf
novation), which was due to happen in December 2004.
of Olympic Airways:
The transfer of the contracts to the State was indeed
completed in December 2004.
Date of payment Amount
paid
(EUR)
(143) When Olympic Airways had recovered the money from
10 May 2004
12 390 090 (*)
the escrow account in December 2004, it had not repaid
the advance from the State. On 23 March 2005 the State
8 October 2004
12 288 017 (*)
wrote to Olympic Airways requesting repayment of the
amount, plus interest. At the date of their final report to
9 March 2005
12 267 250 (*)
the Commission, on 14 June 2005, the experts
confirmed that Olympic Airways had not repaid the
Total 36
945
357
amount to the State.
(*) Principal plus interest.
5.2.6. OTHER EXPENSES
(144) In their review of Olympic Airways’ books, the experts
(139) The experts also found that the Government had asked
found that the creditor balances at 31 December 2004
the Greek tax authorities to recover the money from
showed a sum of EUR 8 million owing to the State-
Olympic Airways. The tax authorities had submitted
owned Greek Telecommunications Organisation (OTE).
debit notes to Olympic Airways requesting payment.
Olympic Airways’ general ledger showed that Olympic
The amount was recorded in Olympic Airways’ books
Airways had not paid OTE for services at some
as a liability to the tax authorities, but had not yet
locations in 2003 and 2004. Of the balance, EUR 4,5
been repaid.
million related to periods before 2003.

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EN
18.2.2011 Official
Journal
of
the
European
Union L
45/19
5.3. EXPERTS’ CONCLUSIONS ON OLYMPIC AIRLINES
credit terms from its suppliers. The experts carried out an
AFTER RESTRUCTURING
analysis of the company’s cash flow of the company in
2004, and showed that the company had followed the
5.3.1. OLYMPIC AIRLINES’ RESULTS IN 2004
latter course, with creditors increasing by EUR […]
million in the year. Among the most significant
(145) The experts found that Olympic Airlines had experienced
increases in the suppliers account there was a sum of
a difficult trading year in 2004, resulting in an operating
EUR […] million owed to AIA, up from EUR […]
loss of EUR 94,5 million on turnover of EUR 616,7
million in 2003. In April 2005, Olympic Airlines
million, and a net loss for the year, before tax, of
entered into a settlement agreement with AIA for the
EUR 87,1 million. Even in terms of gross operating
payment of EUR […] million of the EUR […] million
profit (turnover less direct costs of services) the
debt outstanding at that date. The terms of the agreement
company had achieved a profit of just EUR 4 million.
were for fixed monthly payments to be made between
The 2003 profit-and-loss figures included a provision of
30 April 2005 and 30 November 2005. Another
EUR 13 million as an extraordinary item, of which EUR
significant component in the debt owed by Olympic
12,6 million had been released back to income in 2004.
Airlines at 31 December 2004 was a balance of EUR
It was therefore more appropriate to view the loss for
[…] million owed to Olympic Aviation; this had
2004 as EUR 99,7 million, rather than EUR 87,1 million.
increased from EUR […] million at 31 December 2003.
(146) The experts pointed out that the net assets of the
company, at EUR 24,3 million, had fallen to 18,6 % of
the share capital of EUR 130,4 million at the end of
(149) As regards the activities of Olympic Airlines in 2005, the
2004. Furthermore, if the goodwill of EUR 18 million
experts observed that financial statements were not
were to be written off, the net assets would be reduced to
available for periods after 31 December 2004, but
4,8 % of share capital. Law 2190, which governed public
from other financial records and discussions with
limited companies, required that when the net worth of a
management they concluded that Olympic Airlines had
company fell below 50 % of its share capital a share
incurred further losses in the first quarter of 2005. As in
holders’ meeting had to be convened to take measures
previous years, this had resulted in a squeeze on cash
to restore the company’s balance sheet and hence the
flow and had forced management to seek short-term
protection of creditors. That had not happened in the
financing solutions. Additional positive cash flow had
present case. Under the same law, if the net worth of a
been generated by the delayed payment of charges to
company fell below 10 % of share capital, the Ministry of
Athens International Airport, and security had been
Commerce had power to withdraw the company’s licence
provided in the form of mortgages on aircraft totalling
to trade. But the experts said that this measure was a last
EUR 36 million.
resort and was rarely taken in practice.
(147) The principal reasons advanced by Olympic Airlines
(150) The experts concluded that Olympic Airlines’ business
management for this result were:
was heavily cyclical, as evidenced by the negative cash
flow in the months of October to March, which was
compensated for by positive cash flow in the months
of April to September. This cycle repeated itself each
— a negative response by the tourism market to the
year. The net inflows in the summer months did not
restructuring of the Olympic Airways group,
compensate in full for the net outflows in the winter
resulting in lower bookings in the Christmas
months, so that overall there was an ongoing need for
2003/New Year 2004 holiday period;
additional facilities. It was not clear when the company
would become cash-flow positive year on year, but
management hoped that under new ownership this
would happen in 2006 at the earliest or 2007 at the
— cabin crew strikes between December 2003 and
latest.
February 2004 that resulted in cancelled flights,
lower bookings and increased costs during that
period;
5.3.2. TAX (INCOME TAX, CORPORATION TAX, SOCIAL
SECURITY AND VAT)
— additional costs relating to the restructuring,
including the need to employ significantly more
(151) The experts reviewed the accounts, books and records of
pilots than envisaged, and higher lease costs and
Olympic Airlines in relation to employee income tax,
more wet leases than expected.
social security contributions and VAT for the period
from December 2003 to May 2005. They observed
that under the terms of the hive-off of flight operation
to Olympic Airlines, only one month’s tax and social
(148) As Olympic Airlines did not have cash reserves to
security liabilities had been transferred to Olympic
finance these losses, the experts concluded that its only
Airlines in respect of Olympic Airways staff transferred
options were to borrow money or to obtain extended
to the new company.

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L 45/20
EN
Official Journal of the European Union
18.2.2011
(152) The total tax and social security bill owed by Olympic
2005, the company entered into a settlement
Airlines to the Greek State had increased by EUR 20,2
agreement with the tax authorities to pay the outstanding
million between December 2003 and December 2004.
debt of EUR […] million in 18 monthly instalments
This formed part of the EUR 94,4 million owed by
starting in March 2005; this effectively converted the
Olympic Airlines.
balance owed into an 18-month loan facility. Since
March 2005 the company has complied with this
arrangement and with its ongoing monthly obligations.
(153) Employee and employer social security contributions
(IKA) were accounted for and paid to the State on time
up to October 2004. Between October 2004 and
(154) The experts found that Olympic Airlines had properly
February 2005, payments were not made. In March
accounted for and paid VAT in the period.
5.3.3. AIRCRAFT
Aircraft type Number […] Number
of
seats Ownership
Airbus A340-313
4 […] 295 Leased
Airbus A300-65
3 […] 269 Leased
Boeing 737-400 14 […] 150 Owned
7/leased
7
Boeing 737-300
2 […] 136 Leased
Boeing 717-200
3 […] 100 Leased
ATR-72-320
7 […] 68 Owned
ATR-42-320
6 […] 50 Owned
4/leased
2
DHC-8
4 […] 37 Leased
Total 43
(155) The experts reported that Olympic Airlines had
Airways Services), the sublease charges were lower than
commenced operations with a fleet of 43 aircraft, 18
those due under the head lease. When they asked
owned and 25 leased. Since that time the number of
Olympic Airlines management why this was and how
aircraft owned by Olympic Airlines had remained the
it could be justified, they were told that the subleases
same, and the number it leased had fallen by three.
were at market rates. According to Olympic Airlines
Two Airbus A300-600 aircraft owned by Olympic
management, Olympic Airways (Olympic Airways
Airways and leased by Olympic Airlines had been sold
Services) benefited from the arrangement because it had
in February 2005, and the lease of one Boeing 737-3000
a lessee for its aircraft. Olympic Airlines stressed that it
had not been renewed when it expired in March 2005.
could source its leased aircraft from elsewhere if Olympic
Airways did not offer market rates. Olympic Airlines
benefited because it was able to lease the aircraft at
5.3.3.1. Operating leases
what it considered to be current market rates rather
than the higher rates that had obtained under the
(156) Olympic Airlines subleased aircraft from Olympic
original contracts.
Airways, Olympic Aviation (Olympic Airways Services)
and, in the case of four finance leases, direct from the
Greek State (see Section 5.3.3.2). Eighteen aircraft were
currently leased on operating leases, either direct from
the lessors or subleased from Olympic Airways or
Olympic Aviation (Olympic Airways Services). As the
(158) The experts carried out a comparison of the head-lease
leases between the lessors and Olympic Airways and
and sublease rates, and found that for the year to
Olympic Aviation (Olympic Airways Services) expired,
31 December 2004 the total charges for subleases
Olympic Airlines entered into new lease contracts
from Olympic Airways to Olympic Airlines amounted
directly with the lessors.
to EUR 29,7 million, whereas the total head-lease costs
paid by Olympic Airways for the same aircraft over the
same period amounted to EUR 67,3 million. The lease
(157) The experts found that where aircraft were subleased
cost ultimately borne by Olympic Airways was EUR 37,6
from Olympic Airways or Olympic Aviation (Olympic
million (55 % of the total lease cost).

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EN
18.2.2011 Official
Journal
of
the
European
Union L
45/21
5.3.3.2. Finance leases
(159) The experts reported that following the initial hive-off, four Airbus A340-300 aircraft, the lease for
which had been guaranteed by Greece, had initially been subleased by Olympic Airways to Olympic
Airlines. However, because of the perceived uncertainty over the future of Olympic Airways and
Olympic Airlines at the time of the hive-off, the financial institutions involved (the lessors) had
imposed more onerous payment and security conditions for the leases. In order to alleviate those
conditions, both for Olympic Airways and for itself as guarantor, the Greek State decided to step into
Olympic Airways’ shoes, and the head leases for all four aircraft were transferred from Olympic
Airways to the State (by novation), two in December 2004 and two in April 2005. The experts
observed that in order to be able to do this legally it was necessary for the Greek Parliament to pass
new legislation (Article 53 of Law 3283/2004).
Price of head lease
Price of sublease
Price of sublease State/
Aircraft Reg.
No
Olympic Airways/
Olympic Airways/
Olympic Airlines (after
State - lessor
Olympic Airlines
novation)
Airbus A340-300
SX-DFC EUR
789
648 USD
600
000 USD
600
000
MSN 280
Lease agreement date 8.10.1999 27.5.2004 27.4.2004
Airbus A340-300
SX-DFD EUR
770
599 USD
600
000 USD
600
000
MSN 292
Lease agreement date 8.10.1999 27.5.2004 25.4.2004
Airbus A340-300
SX-DFA EUR
744
509 USD
525
000 EUR
395
000
MSN 235
Lease agreement date 8.10.1999 12.12.2003 17.12.2004
Airbus A340-300
SX-DFB EUR
744
509 USD
525
000 EUR
395
000
MSN 239
Lease agreement date 8.10.1999 12.12.2003 17.12.2004
Note 1: Head lease payments are half-yearly in arrears.
Note 2: Sublease payments are monthly in advance.
Note 3: All payments shown in the table are on a monthly basis.
Monthly head-lease payments are based on annual payments for 2004 divided by 12.
Note 4: All figures exclude interest.
(160) The experts also carried out a comparison between the
5.3.4. SPATOSIMO
head-lease rates and the sublease rates in respect of these
four aircraft. They found that the head-lease charges paid
(162) The experts reported that between December 2003,
by the State amounted to approximately EUR 750 000
when Olympic Airlines commenced operations, and
per month, whereas the sublease charges ranged from
31 December 2004, the airport tax collected by
approximately EUR 400 000 to EUR 500 000 per
Olympic Airlines from its customers amounted to EUR
month. In effect the Greek State lost between
[…] million, and the amount paid to the tax authorities
EUR 250 000 and EUR 350 000 on each of these four
amounted to EUR […] million. In March 2004, and from
aircraft each month.
June to September 2004, payments to the tax authorities
had been made on time (by the 20th of the month
(161) The experts also indicated that between December 2004
following collection). For the other months between
and the end of March 2005, Olympic Airlines had made
December 2003 and March 2005, payments had been
no payments to the State for the two A340s the State
made between one and five months late. The balance at
was subleasing to it. At the end of March 2005, Olympic
31 December 2004 was EUR […] million, which repre
Airlines’ liability to the Government in respect of these
sented about three months’ collections. At 31 March
two subleases was EUR 5,1 million. Olympic Airlines
2005, the amount of airport tax due was EUR […]
paid this sum in April 2005, along with the lease cost
million, which represented about two and a half
for that month.
months’ collections.

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L 45/22
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Official Journal of the European Union
18.2.2011
5.3.5. CHARGES PAID BY OLYMPIC AIRLINES TO OLYMPIC
the company is run as a private-sector company under
AIRWAYS SERVICES FOR GROUND HANDLING AND
the Airport Development Agreement, and is not subject
TECHNICAL SUPPORT
to the laws on Greek State-controlled entities.
(163) As Olympic Airlines comprises only the flight divisions
of Olympic Airways and Olympic Aviation, it is unable
itself to carry out the ancillary functions essential for the
running of an airline (line maintenance, refuelling,
(167) AIA was and is Olympic Airways/Olympic Airlines’
ground handling etc.), and has to pay to have these
largest creditor, with annual charges of approximately
things done. The Commission asked the experts to
EUR 60 million. As AIA costs form such an important
verify the claim made by the Greek authorities that
component of Olympic Airlines’ cost base, it was
Olympic Airlines paid market prices for these services,
necessary for the experts to examine the relationship
and that the contracts had thus been concluded at arm’s
between Olympic Airlines and AIA to determine
length.
whether the airline received favourable terms that
might amount to indirect State support. The experts
determined that Olympic Airlines’ liabilities and
payments to AIA for the period since it began operations
up to 19 May 2005 were as follows:
(164) The experts reported that a series of seven contracts had
been concluded between Olympic Airlines and Olympic
Airways Services (including Olympic Aviation and
Olympic Catering) for a range of services including
ground handling, technical maintenance, cargo and mail
handling, storehouse management, accounting support
[…] […] […] […]
and consulting, human resources training and general
flight itinerary programming services, information tech
[…] […] […] […]
nology and telecommunications services, and catering.
The experts found that in 2004, companies within the
[…] […] […] […]
Olympic Airways group had provided Olympic Airlines
with services to a value of approximately EUR […]
[…] […] […] […]
million. The main service contracts between Olympic
Airlines and the Olympic Airways group were for
[…] […] […] […]
ground handling and maintenance services. Olympic
Airlines used the Olympic Airways group for […] % of
its ground handling services and for all of its main
tenance. The contracted fees for 2004, based on
scheduled flight activity, were EUR […] million for
(168) The experts reported that AIA imposed charges on
ground handling and EUR […] million for maintenance.
airlines for a range of services provided by the airport,
including aircraft landing and parking fees, security, and
ground handling infrastructure. The charges were levied
at standard rates, which were detailed in a document
published by AIA in June 2003 setting out guidelines
(165) The Commission’s experts examined the rates charged by
for customers, terms and conditions of use, and a
the Olympic Airways group to Olympic Airlines and to
schedule of traffic charges. Standard payment terms
other airlines. The rates charged for ground handling
were 20 calendar days. Late payment interest was
services were lower, but this was attributed by Olympic
payable at 3 % above Euribor.
Airlines management to commercial factors, as Olympic
Airlines was the largest customer and received volume
discounts. For the catering services it received Olympic
Airlines appeared to pay market prices, and for technical
maintenance services Olympic Airways charged Olympic
(169) The experts learned that in late 2004 Olympic Airlines
Airlines on a basis different to the system it applied to
had entered into a financial settlement agreement with
other customers, making meaningful comparison
AIA under which Olympic Airlines was entitled to settle
impossible. Olympic Airlines management had stated
invoices from AIA within a period of 45 days instead of
that, in their view, the rates for all the services
the 20 days applicable under AIA’s normal payment
supplied by Olympic Airways had been negotiated at
conditions. The extended payment terms applied from
arm’s length and represented fair market value.
1 July 2004 to 28 February 2005. As a condition for
receiving these extended terms, Olympic Airlines was
required to provide security in the form of a mortgage
in favour of AIA on two […] aircraft, up to a maximum
amount of EUR […] million. The liability at
5.3.6. AIA CHARGES
31 December 2004 represented approximately four
months’ charges, and in May 2005 it represented
(166) AIA is a 55 % State-owned company responsible for the
approximately five months’ charges, which is clearly in
construction, operation and development of Athens
excess of the 45-day payment terms to be allowed under
International Airport. Although majority State-owned,
the financial settlement agreement.

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EN
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Union L
45/23
(170) On 22 April 2005, Olympic Airlines entered into a
In its judgment in Case C-415/03 Commission v Greece,
settlement agreement with AIA for the payment of
delivered on 12 May 2005, the Court of Justice found
EUR […] million of the EUR […] million debt
that the Member State had not taken the necessary
outstanding at that date. This agreement provided for a
measures.
further EUR […] million in security. Under this
agreement variable monthly payments were to be made
between 30 April 2005 and 30 November 2005. Of the
EUR […] million, EUR […] million would come from
revenue from public service obligations. Security of EUR
(176) Article 228(2) of the Treaty provides that ‘If the
[…] million was provided in the form of preferred
Commission considers that the Member State
mortgages on two […] aircraft and four engines.
concerned has not taken such measures it shall, after
giving that State [by letter of formal notice] the oppor
tunity to submit its observations, issue a reasoned
opinion specifying the points on which the Member
State concerned has not complied with the judgment
(171) On the basis of this information, the experts were of the
opinion that allowing Olympic Airlines to build up debts
of the Court of Justice’.
of EUR […] million over the winter season, and then to
convert them into an 18-month short-term loan to be
paid over the summer season, in practice amounted to
providing Olympic Airlines with seasonal working capital
financing. This financing, together with continued
6.2. EXISTENCE OF AID
tolerance of late payments, suggested that Olympic
Airlines was receiving treatment from AIA that would
(177) The Commission has made an in-depth analysis of the
not be available to other airlines.
comments received in the course of the procedure, the
observations submitted by Greece, and the experts’ study
of the restructuring of Olympic Airways and of the
behaviour of Olympic Airways and Olympic Airlines
since restructuring. The Commission has decided to
6. ASSESSMENT OF THE AID
consider the question whether State aid has been
granted under four main headings: (i) the restructuring
6.1. LEGAL BASIS OF THE ASSESSMENT
itself; (ii) whether any other State aid has been given to
Olympic Airlines since 2003; (iii) the grant of EUR 130
(172) Article 87(1) of the EC Treaty states that ‘any aid granted
million to Olympic Airways; and (iv) whether any other
by a Member State or through State resources in any
State aid has been given to Olympic Airways.
form whatsoever which distorts or threaten to distort
competition by favouring certain undertakings or the
production of certain goods shall, in so far as it affects
trade between Member States, be incompatible with the
common market’.
(i) What was the nature of the restructuring of the
Olympic Airways group carried out in December
2003?
(173) The concept of State aid encompasses any advantage,
direct or indirect, which is financed out of State
resources and is granted by the State itself or by any
(178) In drawing up and implementing Law 3185/2003 the
intermediary body acting by virtue of powers conferred
intention of the Greek authorities seems to have been
on it.
to enable the flight divisions of the Olympic Airways
group, now absorbed into Olympic Airlines, to
continue trading and to proceed to privatisation. The
Commission must therefore examine the relationship
(174) The present Decision relates only to aid granted after the
between Olympic Airways and Olympic Airlines.
2002 Decision. It is not concerned with any possible
Olympic Airlines was established out of the flight
State aid element in any future transaction or trans
divisions of Olympic Airways and continues Olympic
actions in respect of the shares or assets of any of the
Airways’ core flight operations; it initially took over all
companies involved.
of Olympic Airways’ aircraft, and currently operates 40
aircraft, compared to the 43 previously flown by
Olympic Airways, with the same crews on the same
routes. Olympic Airlines has succeeded to the route
network, the public service obligation contracts and the
(175) Article 228 of the EC Treaty provides that ‘If the Court
rights under bilateral agreements with non-EU countries
of Justice finds that a Member State has failed to fulfil an
governing routes previously operated by Olympic
obligation under the Treaty, the State shall be required to
Airways. As previously mentioned, Olympic Airlines
take the necessary measures to comply with the
was established under Law 3185/2003, which deals
judgment of the Court of Justice.’ In the case under
specifically with the case of Olympic Airways/Olympic
consideration, the aid was found by the 2002 Decision
Airlines, and confers exemption from the provisions of
to be illegal and incompatible with the common market.
Greek company law that would ordinarily apply.

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L 45/24
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Official Journal of the European Union
18.2.2011
(179) Olympic Airways was heavily indebted, and had
found that ‘the operation in issue transferred all the
previously been found by the Commission to have
assets of the company Olympic Airways, free of all
received illegal and incompatible State aid; the hive-off
debts, to the new company Olympic Airlines … that
has removed Olympic Airways’ revenue-generating flight
operation was structured in such a way as to make it
divisions, while very few of the corresponding liabilities
impossible, under national law, to recover the debts of
have been transferred. All long-term debt has been left
the former company Olympic Airways from the new
with the predecessor companies, and of the taxes, social
company Olympic Airlines’
( 12 ). It added that ‘the
security and other charges payable to the Greek State by
operation created an obstacle to the effective implemen
the Olympic Airways group only one month’s liabilities
tation of Decision 2003/372/EC [the 2002 Decision] and
have been transferred to Olympic Airlines. In addition to
to the recovery of the aid by means of which the Greek
the tax liabilities owed directly to the Greek State,
State had supported the commercial activities of that
Olympic Airways had a liability to AIA of approximately
company. The purpose of that decision, which aims to
EUR 93 million at the date of the hive-off. Under the
restore undistorted competition in the civil aviation
terms of the hive-off none of this was transferred to
sector, was thus seriously compromised’. Thus the
Olympic Airlines; all of it remained with Olympic
Court concluded that the essential aim of the restruc
Airways.
turing operation was artificially to insulate the flying
divisions of Olympic Airways from what had happened
before.
(180) The Commission also concludes that as the privatisation
process envisaged by Law 3185/2003 continues, the
already heavily indebted Olympic Airways group will
(183) It is therefore clear that the restructuring of Olympic
be left with no trading activities, minimal assets, and
Airways in 2003 that established Olympic Airlines,
debts amounting to hundreds of millions of euro. It
while it did lead to the creation of a separate legal
will therefore be even less likely to repay the incom
entity, was nevertheless carried out so as to avoid
patible State aid, as it is required to do by the 2002
recovery under the 2002 Decision, and that Olympic
Decision. It is the intention of the Greek authorities
Airlines is a successor company to Olympic Airways at
that the rules on insolvency should be applied to
least for the purposes of the recovery of State aid granted
Olympic Airways and Olympic Aviation and that they
before the hive-off.
should be liquidated. The costs would be borne by the
creditors, principally the Greek State. The Commission
observes that both Olympic Airways and Olympic
Airlines are owned in their entirety by the Greek State,
so that the establishment of Olympic Airlines is not so
(ii) Has Olympic Airlines received State aid since it was
much a restructuring as an artificial reorganisation within
established?
a single group. This understanding of the matter is
supported by an examination of Law 3185/203,
whereby Olympic Airlines obtains ‘protection’ from the
ordinary provisions of the Greek Civil Code and
(184) The experts concluded that Olympic Airlines had been
Commercial Code in respect of debts contracted by
losing money since it was established. With regard to the
Olympic Airways before the hive-off of the flight
points raised when the procedure was initiated, the
division. The implication is that in the absence of the
experts found that since it was established Olympic
special legislation the application of the ordinary
Airlines had made all required payments of the
domestic law would also lead to the conclusion that
spatosimo tax; on the issue of ground handling and main
there was continuity between the two companies.
tenance services provided by Olympic Airways to
Olympic Airlines, the Commission does not have
enough information to be able to take a view on
whether there is any element of State aid. With regard
to tax and social security, the experts found that except
for some delayed payments (which had incurred
(181) The Commission further observes that the classification
penalties) Olympic Airlines had met its obligations.
of Olympic Airlines as a successor to Olympic Airways
was explicitly acknowledged by Greece in its letter to the
Commission of 2 June 2005, in which it referred to
Olympic Airlines as a ‘successor company’ to Olympic
Airways for the purposes of recovery.
(185) As far as spatosimo and tax and social security obligations
are concerned, therefore, the Commission concludes that
Olympic Airlines has not received State aid since it came
into being. However, during their examination of the
company’s books the experts found that Olympic
(182) The Court of Justice has also considered the transfer of
Airlines had benefited from favourable terms from its
assets to Olympic Airlines, which is the essential
suppliers in two respects.
component in the restructuring, in its judgement in
Case C-415/03 Commission v Greece. The Court there
( 12 ) Paragraph 33 of the judgment.

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EN
18.2.2011 Official
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Union L
45/25
(186) Olympic Airlines subleases aircraft from Olympic
(190) The Commission has therefore to decide whether the
Airways, from Olympic Aviation and, in the case of
actions taken by Olympic Airways and AIA are
four finance leases, direct from the Greek State. The
imputable to the State. As discussed in paragraph 192
experts showed that in all cases the sublease rates were
below, the imputability to the State of a measure taken
lower than those charged under the head leases
by a public undertaking may be inferred from a set of
concluded with the head lessors. In the case of the
indicators arising from the circumstances of the case and
four finance leases, the Greek State was losing between
the context in which that measure was taken.
EUR 250 000 and EUR 350 000 on each aircraft each
month. In the case of the aircraft subleased to Olympic
Airlines by Olympic Airways, the difference between
what Olympic Airlines paid and what Olympic Airways
paid meant that in 2004 Olympic Airways had lost
EUR 37,6 million, or 55 % of the cost of the lease.
(191) With regard to the decision by Olympic Airways to
sublease its aircraft to Olympic Airlines at prices
significantly below those of the head leases, and by so
doing to lose EUR 37,6 million, the Commission
observes that the State held 100 % of the shares of
both Olympic Airways and of Olympic Airlines. The
(187) In examining the relationship between Olympic Airlines
management and the directors of both companies were
and AIA, the Commission’s experts came to the
appointed by the State. It has to be concluded that
conclusion that allowing Olympic Airlines to build up
Olympic Airways and Olympic Airlines were (and still
debts of EUR […] million over the winter season, and
are) under the control of the State. Greece was able to
then to convert them into an eight-month short-term
exercise a dominant influence over both undertakings,
loan to be paid over the summer season, amounted to
both directly and indirectly, as Olympic Airways’ largest
providing Olympic Airlines with seasonal working capital
creditor. Consequently, the decision by Olympic Airways
financing. This financing, together with continued
to sublease aircraft to Olympic Airlines was not the act
tolerance of late payments, suggested that Olympic
of an independent undertaking.
Airlines was receiving treatment from AIA that would
not be available to other airlines.
(192) With regard to AIA, notwithstanding Greece’s insistence
(188) With regard to this favourable treatment the Commission
that it has no role to play in influencing AIA’s
can firstly conclude that the decision by the Greek
commercial behaviour, the Commission observes that
authorities to sublease aircraft to Olympic Airlines at a
the State owns 55 % of AIA’s share capital and
loss of between EUR 250 000 and EUR 350 000 per
appoints four of the nine directors. The Court of
aircraft per month is clearly a transfer of State
Justice has indicated other criteria that may be used in
resources from the State to Olympic Airlines. The
determining whether an aid measure taken by a public
measure reduces costs that Olympic Airlines would
undertaking is imputable to the State ( 16 ). These include
otherwise have to bear. The measure is specific, in that
‘its integration into the structures of the public adminis
it is directed solely at Olympic Airlines, and it distorts or
tration, the nature of its activities and the exercise of the
threatens to distort competition, in that Olympic Airlines
latter on the market in normal conditions of competition
operates in fully liberalised air transport market.
with private operators, the legal status of the undertaking
(in the sense of its being subject to public law or
ordinary company law), the intensity of the supervision
exercised by the public authorities over the management
of the undertaking, or any other indicator showing, in
the particular case, an involvement by the public
authorities in the adoption of a measure or the unli
(189) It is settled case-law that no distinction is to be drawn
kelihood of their not being involved, having regard also
between cases where aid is granted directly by the State
to the compass of the measure, its content or the
and cases where it is granted by public or private bodies
conditions which it contains’. Although AIA is majority
established or appointed by the State to administer the
State-owned, it is operated as a private enterprise inde
aid ( 13 ). However, for an advantage to be regarded as
pendent of the Greek State in its day-to-day business
State aid within the meaning of Article 87(1) of the
(only four of its nine directors are appointed by the
Treaty it must, first, be granted directly or indirectly
State), and given that all debts owed by Olympic
through State resources ( 14 ), and, second, be imputable
Airways/Olympic Airlines to AIA are repaid with
to the State ( 15 ).
interest and have been secured by mortgages on
aircraft, the Commission cannot make a definitive
( 13 ) Case 78/76 Steinike & Weinlig v Germany [1977] ECR 595,
finding that the actions of AIA are imputable to the
paragraph 21.
State.
( 14 ) Joined Cases C-72/91 and C-73/91 Sloman Neptun v Bodo Ziesemer
[1993] ECR I-887, paragraph 19.
( 15 ) Joined Cases 67/85, 68/85 and 70/85 Van der Kooy and Others v
( 16 ) Case C-482/99 Commission v France (‘Stardust Marine’) [2002] ECR
Commission [1988] ECR 219, paragraph 35.
I-4397, paragraph 56.

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Official Journal of the European Union
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(193) Accordingly, the Commission finds that the lease
already in a very difficult financial situation. In the 2002
arrangements between Olympic Airways and Olympic
Decision the Commission had found that the company
Airlines distort or threaten to distort competition,
had received illegal and incompatible State aid, and had
because they are specific, in that they favour one under
ordered that the aid be recovered with interest. Olympic
taking by freeing it from liabilities that it would
Airways had just been deprived of its flight divisions, and
otherwise have to bear. The Commission also observes
had been left with most of the liabilities which would
that the measures affect trade between Member States
normally attach to those divisions. At the end of 2003
and distort or threaten to distort competition in this
Olympic Airways owed the Greek State a total of EUR
market, as they involve a Community air carrier, as
522 million in unpaid tax and social security liabilities.
explained in paragraph 193. The Commission
Given its financial position, the Commission has to take
concludes that the lease arrangements whereby Olympic
the view that Olympic Airways would manifestly have
Airlines leases aircraft either from Olympic Airways or
been unable to obtain a comparable cash advance from a
from the State constitute a grant of State aid to Olympic
private investor in the same situation. This is so
Airlines for the purposes of Article 87(1) of the Treaty.
particularly as the ‘investor’ in the present case was
also Olympic Airways’ largest creditor, and stood little
realistic chance of recovering the sums that Olympic
Airways already owed it. Such a creditor would not
have allowed a situation where the debts continued to
increase while the assets that might have been used to
(iii) What was the status of the cash ‘advance’ from the
satisfy these debts disappeared ( 19 ). On the contrary, a
special account provided for under Law 3185/2003?
private creditor would have taken all legal steps to
How was the cash disbursed and spent? Who
obtain payment of the arrears or to enforce its guar
benefited from the cash disbursements?
antees. The Commission cannot therefore agree with

the Greece’s contention that advancing the sum in
question to Olympic Airways was the act of a prudent
investor.
(194) The Commission can firstly conclude that this payment is
a transfer of State resources (the money comes directly
from the State budget and is expressly provided for in
Article 27 of Law 3185/2003), and that it is an indi
vidual measure, as it is directed exclusively at Olympic
Airways.
(197) The Commission must then consider whether, as the
Greek authorities initially contended, the sum of EUR
130 312 459 can be considered to be a form of compen
sation to Olympic Airways by the State for the assets
which had been taken from Olympic Airways and
vested by the State in Olympic Airlines. In order to
(195) The Greek authorities contend that the grant of
assess the validity of this argument, the Commission
EUR 130 312 459 to Olympic Airways was the act of
has to examine the value of the assets taken from
a prudent investor. According to the relevant Community
Olympic Airways and transferred to Olympic Airlines.
case-law, the conduct of the State as a public investor has
According to the valuation carried out by Olympic
to be compared to that of a notional private investor
Airways management, the value of the assets transferred
who is guided by prospects of profitability in the
to Olympic Airlines amounted to EUR 130 312 459. If
longer term ( 17 ). A capital increase needed to ensure
this were so, there would be no State aid in the transfer
the survival of a company which is experiencing
of the money to Olympic Airways, as no advantage
temporary difficulties, but which after taking appropriate
would be conferred on Olympic Airways.
restructuring measures is in a position to return to profit
ability, does not necessarily constitute State aid if a
private investor would have reached the same conclusion.
The Court of Justice has also indicated that there is no
State aid where a capital increase takes place on terms
that would be acceptable to a private investor operating
under normal market conditions ( 18 ).
(198) The Commission finds it significant here that Olympic’s
own auditors, Deloitte & Touche, expressed reservations
in the annual accounts for the year ending 31 December
2003 with respect to the valuation of assets retained and
transferred between Olympic Airways and Olympic
Airlines. The auditors stated that they were not in a
(196) At the time when the sum of EUR 130 312 459 was
position to confirm the value of goodwill, fixed assets
advanced to Olympic Airways, Olympic Airways was
at valuation and debtors and creditors transferred from
the component companies to Olympic Airlines, and
therefore did not express an opinion on them.
( 17 ) Case C-305/89 Italy v Commission (‘Alfa Romeo’) [1991] ECR I-1603,
paragraph 20.
( 18 ) Joined Cases C-296/82 and C-318/82 Leeuwarder Papierwarenfabriek
( 19 ) Opinion of Advocate-General Mischo in Case C-480/98 Magefesa
[1985] ECR 3727.
[2000] ECR I-8717, paragraphs 32 to 43.

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Union L
45/27
(199) In the study they carried out for the Commission, the
(iv) Has Olympic Airways (Olympic Airways Services)
experts convincingly demonstrated that the assets trans
received State aid since December 2002?
ferred to Olympic Airlines had been overvalued.
Accordingly, on the instructions of the Commission,
the experts carried out their own valuation of the
assets transferred, using accountancy techniques and
(203) The experts have shown that since the date of the last
standards which are accepted both in Greece and inter
Commission Decision concerning Olympic Airways
nationally. They concluded that the value of the net
(12 December 2002), and since the split from Olympic
assets transferred to Olympic Airlines was not in the
Airlines, Olympic Airways has received cash advances
order of EUR 130 million, but instead was approximately
from the State, and its tax and social security liabilities
EUR 38 million. The Commission has carefully examined
to the State have increased.
the data and methodology used by the experts, and
shares their analysis on this point. The Commission
concludes that the value of the assets transferred was
overstated by approximately EUR 91,5 million.
(204) It is clear that the repayments of EUR 36 945 357 on the
ABN Amro loan, the A340 finance lease payments of
EUR 11 774 684 and the direct cash funding of EUR
8,2 million to Olympic Airways involved direct
(200) Despite the fact that in order to obtain a completely
transfers of State resources to Olympic Airways. For
accurate assessment of the amounts concerned there
the reasons explained in paragraph 7, these measures
would have to be a full audit of all the assets and
are new illegal and incompatible aid measures, in so
liabilities, therefore, the Commission can estimate that
far as they are not a mere execution of guarantees that
the amount overstated is in the order of EUR 91,5
the Greek State had given previously. As has already been
million
explained in the examination of the ‘advance’ paid to
Olympic Airways, even though the State has registered
these amounts with the tax authorities as a claim against
Olympic Airways, and even though they are recorded in
Olympic Airways’ books as tax liabilities, the State stands
(201) Having decided this point, the Commission observes that
little or no realistic chance of ever securing their
the overvaluation is specific, as it expressly provides
repayment, and thus cannot be said to have been
money directly to Olympic Airways, and that it confers
acting in a rational or commercial manner when the
an advantage on the company, as it is to be used ‘to
payments were made.
cover severance payments and other expenses for the
retirement, in whatever manner, of the employees, and
to cover the financial obligations of Olympic Airways
and Olympic Aviation in the course of the conversion
and liquidation’ ( 20 ) in order to ‘cover its financial obli
(205) Olympic Airways’ (Olympic Airways Services’) difficult
gations’. The Commission observes incidentally that this
and deteriorating tax and social security situation has
provision was interpreted broadly, and that the sum in
already been described. At the end of 2002 its tax and
question was used to pay for general Olympic Airways
social security liability was already large, at EUR 273
operating costs: over EUR 51 million of the sum
million. The liability has continued to grow significantly
advanced was used to pay for aircraft leases.
over the period since then. At the end of 2004 the
estimated liability was EUR 627 million, so that in the
period covered by the present Decision Olympic Airways’
liability to the State has increased by EUR 354 million.
(202) The Commission also concludes that the measure distorts
or threatens to distort competition and affects trade
between Member States, as it involves a company
which is in competition with other Community
(206) With regard to Olympic Airways’ mounting tax liabilities,
companies, especially since the entry into force of
it is the State itself, through the tax administration, which
Council Directive 96/67/EC of 15 October 1996 on
tolerates the constant deferral and non-payment of
access to the ground handling market at Community
various taxes and charges owed by Olympic Airways.
airports, where ground handling is declared open to
Social security contributions are collected by IKA, a
competition in airports with an annual threshold of 2
public body established by Greek law ( 22 ) which has
million passengers or 50 000 tonnes of freight ( 21 ). The
been made responsible, under State supervision, for
Commission must therefore conclude that the amount by
managing the social security system and collecting
which the assets transferred to Olympic Airlines were
mandatory social security contributions. It has the right
overvalued and which has been paid to Olympic
to conclude settlement agreements for late payments of
Airways amounts to a grant of State aid to Olympic
debts ( 23 ), but is not required to do so. The ever-
Airways within the meaning of Article 87(1) of the
increasing tax liability of Olympic Airways to the State
Treaty.
is therefore, clearly imputable to the State.
( 20 ) Article 27(5)(b) of Law 3185/2003.
( 22 ) Law 1846/1951, Article 11.
( 21 ) OJ L 272, 25.10.1996, p. 36.
( 23 ) Law 2676/1999.

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L 45/28
EN
Official Journal of the European Union
18.2.2011
(207) The Commission must now consider whether this
project of common European interest or remedy a
forbearance involves a transfer of State resources. The
serious disturbance in the economy of a Member State,
concept of State aid encompasses not only positive
nor does it promote culture and heritage conservation.
benefits but also measures that reduce normal charges;
so that the State’s failure to act to enforce its claims
clearly does involve such a transfer.
(212) Article 87(3)(a) and (c) of the Treaty provide for the
exemption of aid intended to promote the economic
development of areas where the standard of living is
abnormally low or where there is serious under
(208) Having established that a transfer of resources imputable
employment. Greece is a region falling in its entirety
to the State has taken place, the Commission must
within the scope of Article 87(3)(a).
determine whether this aid distorts competition. The
Commission takes the view that both the grants of
direct aid and the State’s failure to act to collect
outstanding debts give Olympic Airways a significant
commercial advantage over its competitors. In its
(213) With regard to aviation services the Commission
dealings with Olympic Airways the State has not been
considers that the objectives of regional aid are as a
acting in a rational and commercial manner. As
rule achieved more easily through the imposition of
explained in paragraph 209, there is accordingly a
public service obligations. Public service obligations are
distortion of competition within a liberalised sector of
imposed by the Greek State on companies offering
the internal market. The Commission must therefore
services between islands and between the mainland and
conclude that both the forbearance of the State
the islands, and on some ‘thin’ routes services are
concerning Olympic Airways’ unpaid and mounting tax
contracted out by the State to an airline that receives
and social security liabilities and the payments made by
compensation for providing them. In general the
the State in Olympic Airways’ place constitute State aid
Commission considers that compensation for public
to Olympic Airways within the meaning of Article 87(1)
service obligations is necessary, targeted support, and
of the Treaty.
that provided that the operator is chosen by a trans
parent and non-discriminatory procedure and does not
receive overcompensation such State support does not as
a rule give rise to issues of incompatible State aid. This
was the case with the contracts operated by Olympic
Aviation. Under the terms of the restructuring, these
6.3. COMPATIBILITY OF THE AID
routes are now operated by Olympic Airlines as the
‘successor’ company. Having regard to the limited
(i) Compatibility of aid granted to Olympic Airlines
information at its disposal, the Commission cannot rule
out the possibility that the manner in which the public
(209) Having reached the conclusion that Olympic Airlines has
received State aid since it was established, the
service contracts were transferred from Olympic Aviation
Commission must now examine the measures in favour
to Olympic Airlines failed to comply with the procedures
of Olympic Airlines in the light of Article 87(2) and (3)
laid down for public service obligations by Council Regu
of the Treaty, which provide for exemptions to the
lation (EEC) No 2408/92 of 23 July 1992 on access
general incompatibility declared in Article 87(1).
for Community air carriers to intra-Community air
routes ( 24 ). But in any event Greece cannot invoke the
exemption in Article 87(3)(a) in respect of the sums
granted to Olympic Airlines since its establishment.
(210) The exemptions in Article 87(2) of the Treaty cannot
apply in the present case: the aid does not have a
social character and is not granted to individual
(214) Article 87(3)(c) of the Treaty provides for the exemption
consumers, nor does it make good the damage caused
of aid to facilitate the development of certain economic
by natural disasters or exceptional occurrences, nor is it
activities, where such aid does not adversely affect trading
granted to the economy of certain areas of the Federal
conditions to an extent contrary to the common interest,
Republic of Germany affected by the division of
and the Commission must now consider whether this
Germany.
provision can apply to the present case. In carrying out
this examination the Commission has to have regard to
the applicable guidelines on State aid in the aviation
sector ( 25 ) and State aid for rescuing and restructuring
firms in difficulty ( 26 ).
(211) Further exemptions to the general prohibition on State
( 24 ) OJ L 240, 24.8.1992, p. 8.
aid are set out in Article 87(3). The exemptions in
( 25 ) ‘Application of Articles 92 and 93 of the EC Treaty and Article 61
of the EEA Agreement to State aids in the aviation sector’ (OJ
Articles 87(3)(b) and 87(3)(d) do not apply in this case:
C 350, 10.12.1994, p. 5).
the aid does not promote the execution of an important
( 26 ) OJ C 288, 9.10.1999, p. 2.

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EN
18.2.2011 Official
Journal
of
the
European
Union L
45/29
(215) With regard to the aid granted to Olympic Airlines by
(ii) (a) Compatibility of aid granted to Olympic Airways
means of the reduced cost of aircraft leases, the
Commission will refer once again to the guidelines on
(219) Having concluded that the amount by which the assets
State aid to the aviation sector. Paragraph 14 of the
transferred to Olympic Airlines were overvalued, and
guidelines states that ‘Direct aids aimed at covering
which was subsequently paid by the Greek State to
operating losses are, in general, not compatible with
Olympic Airways, amounts to a grant of State aid to
the common market and may not benefit from an
Olympic Airways, the Commission must examine the
exemption’ from the general prohibition of State aid.
measure in the light of Article 87(2) and (3) of the
The guidelines go on to specify that direct operational
Treaty, which provide for exemptions to the general
subsidisation of air routes can only be accepted in the
incompatibility declared in Article 87(1).
case of public service obligations and of aid having a
social character granted to individual consumers.
(220) The exemptions in Article 87(2) of the Treaty cannot
(216) In the present case the aid granted to Olympic Airlines,
apply in the present case: the aid does not have a
either directly by the Greek State through its leases or
social character and is not granted to individual
indirectly via Olympic Airways, cannot fall within either
consumers, nor does it make good the damage caused
of the acceptable categories of operational subsidisation
by natural disasters or exceptional occurrences, nor is it
of air routes. It is also settled law that new aid cannot be
granted to the economy of certain areas of the Federal
compatible with the common market as long as aid
Republic of Germany affected by the division of
which has previously held to be unlawful has not been
Germany.
repaid, since the cumulative effect of the aid measures
would be to distort competition in the common market
to a significant extent ( 27 ). For the reasons set out above,
Olympic Airlines is the successor to Olympic Airways’
flight division, and therefore its successor for the
purposes of recovery, so that new aid to Olympic
Airlines cannot be compatible as long as the earlier aid
(221) Further exemptions to the general prohibition on State
remains unrecovered. Additionally, the grant of aid is an
aid are set out in Article 87(3). The exemptions in
infringement of previous commitments given by Greece
Articles 87(3)(b) and 87(3)(d) do not apply in this case:
not to grant any further aid to Olympic Airways, and by
the aid does not promote the execution of an important
extension to successor companies (Article 1(e) of the
project of common European interest or remedy a
1994 Decision).
serious disturbance in the economy of a Member State,
nor does it promote culture and heritage conservation.
(217) Although the Greek authorities have not argued that the
sums received by Olympic Airlines since its establishment
arise as a result of the restructuring operation, and even
though the Commission has concluded that Olympic
(222) Article 87(3)(a) and (c) of the Treaty provide for the
Airlines is a successor company to Olympic Airways at
exemption of aid intended to promote the economic
least for the purposes of recovery of State aid granted
development of areas where the standard of living is
prior to the hive-off, for the sake of completeness the
abnormally low or where there is serious under
Commission will additionally examine the aid granted to
employment. Although Greece is a region that falls in
Olympic Airlines in the light of the rescue and restruc
its entirety within the scope of Article 87(3)(a), this
turing guidelines of 1999. Point 7 of those guidelines
provision cannot apply, for the reasons set out in
states that for the purposes of the guidelines a newly
paragraph 211.
created firm is not eligible for rescue or restructuring
aid even if its initial financial position is insecure: this
aid is consequently not covered by the guidelines.
(223) Article 87(3)(c) of the Treaty provides for the exemption
of ‘aid to facilitate the development of certain economic
(218) Thus the aid granted to Olympic Airlines since its estab
activities, where such aid does not adversely affect trading
lishment does not satisfy the tests for exemption under
conditions to an extent contrary to the common interest’,
Article 87(3)(c). The Commission finds that Greece has
and the Greek authorities have requested the
unlawfully granted non-notified new aid to Olympic
Commission, in the event that it should conclude that
Airlines by means of the discounted subleases
the advance is not the action of a market economy
concluded with Olympic Airlines.
investor and therefore has to be seen as State aid
within the meaning of Article 87(1) of the Treaty, to
( 27 ) Case C-355/95 Textilwerke Deggendorf v Commission [1995] ECR
consider whether the measure can be considered to
II-2265.
constitute rescue aid.

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L 45/30
EN
Official Journal of the European Union
18.2.2011
(b) Possible rescue aid
(d) Conditions for the authorisation of rescue aid
(224) The sum in question was disbursed between December
(229) The 1999 Community guidelines on State aid for
2003 and May 2004, and the applicable guidelines for
rescuing and restructuring firms in difficulty lay down
deciding on compatibility are therefore the Community
five conditions all of which must be met if rescue aid
guidelines on State aid for rescuing and restructuring
is to be granted. The Commission must verify whether all
firms in difficulty of 1999. Under point 104 of the
of these conditions are satisfied in the present case.
rescue and restructuring guidelines of 2004 ( 28 ), the
1999 guidelines apply where the aid was granted prior
to 10 October 2004.
(230) First, rescue aid ‘must consist of liquidity support in the
form of loan guarantees or loans. In both cases, the loan
(c) Application of the 1999 rescue and restructuring
must be granted at an interest rate at least comparable to
guidelines
those observed for loans to healthy firms, and in
particular the reference rates adopted by the
(225) Point 4 of the 1999 guidelines states that ‘There is no
Commission; any loan must be reimbursed and any
Community definition of what constitutes a “firm in
guarantee must come to an end within a period of not
difficulty” … the Commission regards a firm as being
more than six months after the disbursement of the first
in difficulty when it is unable, whether through its
instalment to the firm’.
own resources or with the funds it is able to obtain
from its owners/shareholders or creditors, to stem
losses which, without outside intervention by the
public authorities, will almost certainly condemn it to
go out of business in the short or medium term.’
(231) In the present case the rescue aid takes the form of a
cash grant (described as an ‘advance’) of EUR
130 312 450 given by Greece to Olympic Airways and
Olympic Aviation, ostensibly to assist these two
(226) The guidelines go on to say that ‘a firm is, in any event
companies in their restructuring following the hive-off
and irrespective of its size, regarded as being in difficulty
of their flight activities and the establishment of
for the purposes of these Guidelines: (a) in the case of a
Olympic Airlines. No loan interest is to be charged to
limited company, where more than half of its registered
Olympic Airways and Olympic Aviation, and it is
capital has disappeared and more than one quarter of
intended that the sum of EUR 130 312 450 will be
that capital has been lost over the preceding 12 months’.
paid back to the State directly from the sales proceeds
of the privatisation of Olympic Airlines, a company
which Greece insists is outside the ownership of the
Olympic Airways group. If the sale of Olympic Airlines
does not generate sufficient funds to reimburse this
‘advance’, other assets of Olympic Airways will be sold
(227) Point 6 also states that ‘The usual signs of a firm being in
to make up the difference. In these circumstances it is
difficulty are increasing losses, diminishing turnover,
not possible to conclude that the first condition of the
growing stock inventories, excess capacity, declining
1999 rescue and restructuring guidelines is met.
cash flow, mounting debt, rising interest charges and
falling or nil net asset value.’
(232) Second, the aid must ‘be linked to loans that are to be
(228) The Commission observes that Olympic Airways is a
reimbursed over a period of not more than twelve
chronically indebted company which has already lost a
months after disbursement of the last instalment to the
significant part of its authorised capital. Olympic
firm’. As indicated above, the sum in question here
Airways’ debt to the Greek State for tax and social
cannot properly be described as a loan to Olympic
security went from EUR 273 million at the end of
Airways and Olympic Aviation, as repayment is
2002 to EUR 522 million at the end of 2003, when
contingent on the sale of another company. The sum
the advance was paid to it. As has already been
of EUR 130 312 450 was paid out in instalments,
explained, the company has not been able to secure
depending on the needs of Olympic Airways and
any source of commercial finance, and stands little
Olympic Aviation, over a period from 24 December
realistic possibility of being able to pay its debts to the
2003 to 13 May 2004. To date, more than a year
State. The Commission can therefore conclude that
later, there has been no reimbursement, so the second
Olympic Airways is a firm in difficulty within the
condition is not satisfied. Given that the measure has
meaning of the 1999 rescue and restructuring guidelines.
failed to satisfy the first two conditions, further exam
ination of the other three conditions would be
( 28 ) OJ C 244, 1.10.2004, p. 2.
redundant.

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EN
18.2.2011 Official
Journal
of
the
European
Union L
45/31
(233) The Commission observes that the grant to Olympic
ABN Amro; the guarantees for these loans from the State
Airways in 2003 is also in contravention of previous
to Olympic Airways predate the 2002 Decision. Greece
commitments given by Greece not to grant any further
contends that the 2002 Decision did not explicitly call
aid to Olympic Airways (Article 1(e) of the 1994
for the suspension or termination of guarantees granted
Decision). The Commission takes the view that the
by the Greek State to Olympic Airways after 1998, and
measure does not satisfy the tests of rescue aid laid
that this implicitly means that the Commission accepted
down by the rescue and restructuring guidelines.
their continuation and any payments made under them.
The Commission cannot accept this assertion, for the
following reasons.
(234) The Commission must also consider the other measures
which it has decided here amount to State aid, namely
(238) The Commission is of the opinion that the substantive
the grants totalling almost EUR 57 million given by the
provisions of the 2002 Decision were sufficiently clear
Greek State to Olympic Airways, and the forbearance
and unambiguous: ‘Article 1. The restructuring aid
shown by the State towards Olympic Airways, which
granted by Greece to Olympic Airways in the form of
has seen Olympic Airways’ tax and social security
… (b) new loan guarantees totalling USD 378 million for
liabilities rise from EUR 273 million at the end of
loans to be contracted before 31 March 2001 for the
2002, when the restructuring took place, to EUR 627
purchase of new aircraft and for investment necessary for
million at the end of 2004. The exemptions provided for
the relocation of Olympic Airways to the new airport in
in Articles 87(2) and 87(3)(a), (b) and (d) of the Treaty
Spata … is considered to be incompatible with the
cannot apply to Olympic Airways (see paragraphs 219 to
common market within the meaning of Article 87(1)
221), and the Commission must now assess whether the
of the Treaty’.
exemption in Article 87(3)(c) can apply.
With regard to the obligation to recover, the 2002
(235) As explained above, any new aid to Olympic Airways
Decision distinguished between the period 1994–1998
infringes previous commitments not to grant any
and the period 1998–2002. As far as the period
further aid (Article 1(e) of the 1994 Decision). More
1994–1998 was concerned, the Commission
importantly, in considering the new unlawful aid it has
decided under Article 14(1) of Regulation (EC) No
to be borne in mind that Olympic Airways has already
659/1999 ( 30 ) that no recovery was necessary for aid
received aid in the past, so that there is a clear breach of
granted before 14 August 1998. But the State granted
the ‘one-time-last-time’ principle laid down in the
the guarantees at issue here well after that date (in
guidelines on State aid to the aviation sector and State
October 1999 for the four aircraft and in February
aid for rescuing and restructuring firms in difficulty. The
2001 for the ABN Amro loan).
Commission also observes that in accordance with the
case-law of the Court of Justice new aid cannot be
compatible with the common market as long as aid
which has previously held to be unlawful has not been
(239) In any event, the Commission points out that if a
repaid ( 29 ). The new aid granted here, therefore, does not
measure is to constitute the mere execution of a claim
satisfy the tests for exemption under Article 87(3)(c).
under a State guarantee given previously, rather than a
grant of new aid, it must comply fully with the terms of
the original guarantee (such as the identity of the bene
ficiary, the deadlines, the amount covered, the need of a
prior declaration of bankruptcy, etc.). If a Member State
(236) The Commission concludes that by overvaluing the assets
makes a payment in respect of a guaranteed loan under
transferred to Olympic Airlines Greece has granted illegal
conditions other than those initially agreed at the
and incompatible State aid to Olympic Airways to the
granting stage, the Commission will regard the
amount of the overvaluation. It also finds that the grants
payment as new aid which has to be notified under
totalling almost EUR 57 million to Olympic Airways and
Article 88(3) ( 31 ).
the Greek State’s tolerance of late payment and non-
payment of Olympic Airways’ tax and social security
liabilities constitute illegal and incompatible State aid.
(240) For the sake of precision, it appears that the payments
recently made by the Greek State in respect of the above
mentioned loans did not comply with the conditions laid
down in the original guarantees as described by the
7. LEGITIMATE EXPECTATIONS AND STATE GUAR
Greek authorities at the time. For instance:
ANTEES
(237) Greece made several repayments in respect of the four
( 30 ) ‘The Commission shall not require recovery of the aid if this would
finance leases on A340-300 aircraft and the loan from
be contrary to a general principle of Community law.’
( 31 ) See the Commission notice on the application of Articles 87 and
88 of the EC Treaty to State aid in the form of guarantees (OJ C 71,
( 29 ) Case C-355/95 Deggendorf, cited above.
11.3.2000, p. 14).

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L 45/32
EN
Official Journal of the European Union
18.2.2011
— As regards the ABN Amro loan, the Government paid
lished; this figure is provisionally estimated by the Commission
instalments of around EUR 36 million direct, in place
to be approximately EUR 91,5 million.
of the undertaking, without a prior default and
without a prior legal declaration of bankruptcy or
insolvency. The fact that the Government
3. The
granting
by
the
Greek
State
to
Olympic
Airways
of
subsequently asked the company to pay the money
sums totalling approximately EUR 8 million, and the additional
back shows that the payment was not a mere
payment by the Greek State of certain bank loan and finance
execution of claims under a guarantee granted in
lease instalments in place of Olympic Airways, between May
the past.
2004 and March 2005, to the extent that these payments do
not constitute the mere execution of a claim under the guar
antees referred to in Article 1(b) of Decision 2003/372/CE and
— The same considerations apply to the loans relating
of the related conditions, constitutes illegal State aid to Olympic
to the aircraft finance lease payments of around EUR
Airways that is incompatible with the Treaty.
11 million and to the direct cash funding of around
EUR 8 million.
4. The
continued
forbearance
of
the
Greek
State
towards
Olympic Airways in relation to tax and social security debts
— Moreover, the loan contracts for the four aircraft
to the State amounting to some EUR 354 million between
were formally amended (by novation) so that the
December 2002 and December 2004 constitutes illegal State
State replaced the undertaking as recipient of the
aid to Olympic Airways that is incompatible with the Treaty.
loans. These very substantial changes predated the
payments at issue here.
Article 2
— The advance of EUR 8 million pending the
1. Greece shall recover from the recipients thereof the aid
amendment of two of the lease contracts was
referred to in Article 1.
clearly not a measure envisaged in the original
guarantee.
2. Recovery shall be effected without delay and in
accordance with the procedures of national law provided they
(241) In so far as there were changes, and in so far as the
allow the immediate and effective enforcement of this Decision.
changes were never notified to the Commission nor
The aid to be recovered shall include interest from the date on
approved by the Commission, these payments clearly
which it was at the disposal of the recipient until the date of its
constitute new unlawful aid. When this Decision is
recovery. Interest shall be calculated on the basis of the
being enforced, however, the Commission is prepared
reference rate used for calculating the grant equivalent of
to examine any further submissions that may be made
regional aid.
by the Greek authorities concerning the payment of
around EUR 36 million of the instalments of the ABN
Amro loan or the payment of around EUR 11 million
Article 3
under the lease contract for the acquisition of the four
aircraft, and the compatibility or otherwise of all or part
Greece shall immediately suspend all further payments of aid to
of these payments with the terms of the original guar
Olympic Airways and Olympic Airlines.
antees,
Article 4
HAS ADOPTED THIS DECISION:
Greece shall inform the Commission within a period of two
months from the date of notification of the present Decision of
Article 1
the measures taken to comply with Articles 2 and 3.
1. The acceptance by Olympic Airways and by Greece of
aircraft sublease payments from Olympic Airlines which are
Article 5
lower than the amounts paid under the head leases, resulting
in losses borne by Olympic Airways in the order of EUR 37
This Decision is addressed to the Hellenic Republic.
million in 2004 and by the State in the order of EUR 2,75
million up to May 2005, constitutes illegal State aid to Olympic
Done at Brussels, 14 September 2005.
Airlines that is incompatible with the Treaty.
For the Commission
2. Greece has granted illegal and incompatible State aid to
Olympic Airways to the amount by which it overvalued the
Jacques BARROT
assets of Olympic Airlines when Olympic Airlines was estab
Vice-President

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