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source: bbc.co.ukBritish Airways has terminated its contract to manage Olympic Airways and abandoned plans to take a 20% stake in the Greek carrier.
The decision leaves the current owner, the Greek government, in the lurch and could ultimately threaten the survival of Olympic.
Sources at British Airways say the move bears the handwriting of the company's new boss Rod Eddington.
BA's performance during the past year has been poor. During the first quarter of 2000 it plunged deep into the red, forcing the resignation of chief executive Bob Ayling.
Mr Eddington now wants BA to focus on its core business again. Pulling out of any loss-making ventures is part of the strategy.
BA recently sold its French subsidiary Air Liberte, an investment that never made any money for its parent company.
Company insiders say that "anything that's a distraction or making losses will have to go".
Speedwing turn-around fizzles
Officially, BA refuses to comment beyond saying that the break-up was "amicable" and releasing a two-sentence statement confirming the facts.
A year ago, BA subsidiary Speedwing took over the management of Olympic and was reportedly close to engineering a turn-around.
The agreement gave Speedwing until the end of 2001 to turn operations into profit.
The management contract included an option to buy a 20% stake in the Greek airline, and in December 1999 BA agreed in principle to take the stake in the coming months.
The Greek government had hoped BA's investment would open the way for Olympic to be floated on the Athens Stock Exchange.
Greek Finance and Economics Minister Yannos Papandoniou has now announced a new tender for the 20% minority stake in Olympic, along with a new management contract.
According to Transport Minister Christos Verelis, Olympic could fold if the tender fails to attract any bidders.
In 1998 the airline made an operating loss of 10.36bn drachma ($29m, £19m).
source: airwise.comUnions at Greek carrier Olympic Airways called a 24-hour strike for July 1 after the Speedwing subsidiary of British Airways took over management at the state airline. Olympic staff staged a demonstration outside parliament, demanding that the deal be scrapped.
Union leader Michalis Perros described the deal as a "gravestone" for Olympic by placing it in the hands of a competitor. "It's like asking a wolf to tend to the sheep," he said.
The Greek government argues Olympic cannot survive unless it forms partnerships with major airlines and insists the deal will not lead to job losses.
Transport Minister Tassos Mandelis described the deal as a last ditch attempt. "Olympic Airways was the only airline left in Europe ... without a strategic partnership and now it has found the best partner, British Airways," Mandelis said.
bbc.co.ukBritish Airways wants to buy 20% of the loss-ridden Greek carrier Olympic Airways.
The Greek government has accepted the proposal and the deal could go through within three months.
Olympic has not made a profit in more than 20 years.
Six months ago, though, BA subsidiary Speedwing took over the management of Olympic and believes to have engineered a turn-around.
Part of the management contract included an option to buy a stake in the Greek airline.
A government official, who asked not to be identified, said the agreement with British Airways would "open the way for Olympic to be floated on the Athens Stock Exchange".
He described the deal as the "first positive news for Olympic after many years".
Another official said BA's move showed that the airline was "finally showing good signs of recovery".
State-owned Olympic has a troubled history. Riddled by strikes and frequent changes of management, the company never managed to compete with its European rivals.
In 1998, Olympic made an operating loss of $31.7m (£20m).
britishairways.comWednesday, 23 June 1999
Olympic Airways Management Contract Awarded
The Greek Transportation Ministry has, subject to final parliamentary approval, awarded a management contract to British Airways’ independent consultancy division, Speedwing, for the turnaround of Olympic Airways, the country’s national airline, and its preparation for possible privatisation.
Covering an initial 30-month period, it is one of the largest and most significant contracts of this kind yet placed in the world airline industry, awarded to Speedwing in the face of strong competition from other agencies in Europe and the United States.
Speedwing will second a small, highly experienced executive team to Olympic, to lead its transformation into a profitable and competitive carrier with a long-term future and to recommend an alliance strategy for the airline. British Airways will provide full support to the project and access to its own resources.
The management team will be led by Rod Lynch, who will become Olympic’s Chief Executive and join its Board, with immediate effect. Mr Lynch is currently Chief Executive of BBC Resources Ltd, a Board member of the UK Civil Aviation Authority and formerly Managing Director of Air Europe and a senior executive at British Airways.
He will be supported as the airline’s Director of Operations by Captain Jock Lowe, currently British Airways’ Commercial Manager Concorde and previously Director of Flight Crew and General Manager Operations Control for the UK airline; and, as Commercial Adviser during the initial phase of the contract, by Peter White, who recently retired from British Airways as Director of Sales having previously served as the airline’s Director for Europe and as Managing Director of British Airways World Cargo
All three secondees played key roles in the turnaround of British Airways in the 1980s, in preparation for its highly successful privatisation in 1987.
Separately from the Speedwing contract, British Airways has indicated it may be interested in taking an equity stake in Olympic following its successful turnaround.
Announcing the contract, Mr Anastasios Mandelis, Greece’s Minister for Transportation, said: “The turnaround of our national airline is a key element to the restructuring of our public sector in preparation for Greece’s entry into European Monetary Union in 2001. Competition to win this contract was intense. We have chosen a team with a proven track record for turning around the fortunes of a national flag carrier and transforming it into one of the biggest successes in the airline industry. We are confident that they will make Olympic a profitable, customer focused carrier of which its employees and the Greek people can be proud.”
Rod Lynch said: “This is a challenge which any airline professional would relish, and I am very much looking forward to working with the team at Olympic to make the airline a real gold-medal winner in this industry.”
Steve Dunning, Managing Director of Speedwing, said: “We are honoured and delighted that the Government of Greece has selected British Airways’ Speedwing to handle what must be the most important airline consultancy project of the decade.”
Chaos reigns at airports as Greek airline workers strike
ATHENS -- Airports around Greece were plunged into chaos yesterday as employees of the state-owned air carrier Olympic Airways went on a 24-hour strike to protest against rationalisation efforts.
Greek state radio said 50 out of a scheduled 79 flights had to be cancelled, forcing some 15000 passengers, including many tourists, to try to book flights on the country's three smaller private airlines.
The Olympic Airways employees staged the strike to show their disapproval of plans for a take-over by Speedwing, a subsidiary of British Airways.
Speedwing is working on a strategy aimed at trying to revamp the heavily-debted Olympic Airways over the next 12 months.
Employees fear this will result in privatisation of the airline and in job losses.
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