Olympic Air and Aegean to merge
Athens Plus, 26 February 2010

Greece’s two largest air carriers, recently privatized Olympic Air and Aegean Airlines, announced on February 22 an agreement to join forces in a bid to withstand the country’s economic downturn and tougher competition in the aviation industry.

The sole shareholder of Olympic Air, Martin Investment Group (MIG), and Aegean’s main shareholder, the Vassilakis Group, have agreed on the merger to create an airline servicing 106 domestic and international routes, employing 5,850 staff members and operating a fleet of 64 planes. The new company will carry the Olympic Air name, which is considered more recognizable.

"The conditions prevailing in the Greek economy as well as in the aviation sector dictate the combination of forces in order to maintain competitive customer prices, protect levels of employment and increase our competitiveness at a European level,” said Andreas Vgenopoulos, chairman of Olympic Air.

The Vassilakis Group, which currently has a 36 percent stake in Aegean, and MIG will hold equal stakes of 25-27 percent each in the newly formed venture, the two companies said in a joint statement that did not provide any financial details. The rest will be held by Aegean’s other current shareholders.

The two airlines surprised the market in mid-February when they announced that they were in talks to create a single company that would have annual sales in excess of 1 billion euros.

Stocks in the newly formed venture will be listed on the Athens bourse.

The agreement between the two airlines, which jointly control 95 percent of Greece’s air travel market, is subject to approval by European Union competition authorities, which are expected to seek the assistance of the Greek competition watchdog.

Ministers said it was important that the merger did not jeopardize competition and the provision of quality services at reasonable prices. The two airlines, which spoke of the creation of a "national champion" in their joint statement, contend that their combined share of the Greek air transport market - both domestic and international flights - amounts to no more than one-third and that, therefore, the merger poses no threat to competition.

Aegean currently serves 24 domestic and 26 foreign destinations, while Olympic Air’s respective figures are 41 and 15.

Sources said layoffs as a result of the merger are not expected to exceed 300.