Greece's Olympic to be transformed into a new company

It looks like Greece will get a new airline and Italy could lose one very soon, according to press reports from Europe. In Italy, an investment group called CAI, which was brought together by Prime Minister Silvio Berlusconi to save Alitalia, has withdrawn its offer after the airline’s unions failed to agree on a package of wage and job cuts proposed by the group. Unless Berlusconi can pull a new white knight out of his hat, that could mean the end of Alitalia, in which the government holds a 49 percent stake. There were reports of sporadic strikes affecting the carrier late last week as angry employees picketed the government’s offices in Rome, and there were also indications that the airline’s ability to purchase fuel could be gone in a matter of days as its cash runs out.

In Greece, meanwhile, the national carrier Olympic isn’t in much better shape, and after unsuccessful attempts to find a purchaser, the Greek government now reportedly plans to privatize the company and re-launch it next year under the name Pantheon Airways. The European Commission has reportedly approved the concept, but it wants Olympic to give back more than $1 billion it received in state aid – something European governments are no longer allowed to give their struggling state-owned airlines under EC rules. Olympic’s unions are also expected to fight the plan. Elsewhere, Germany’s Lufthansa last week concluded a deal to buy 45 percent of Brussels Airlines; the deal gives Lufthansa the option to buy the remaining 55 percent a few years from now. Lufthansa said the combination will mean “optimized connections, mutual use of each other’s frequent flyer programs and extended lounge access.” Lufthansa also owns Swiss International Airlines. Brussels Airlines flies to 62 destinations from its Brussels base, 12 of which are not served by Lufthansa. There were also some unconfirmed reports that Lufthansa might have its eye on SAS as well.