Released on: November 6, 2007, 10:25 am

Press Release Author: newnews

Industry: Financial

Press Release Summary: A European court on Wednesday partially annulled a decision
by the EU\'s executive arm obliging the Greek government to recover state aid to
Olympic Airways.

Press Release Body: While the court agreed with the European Commission that the
Greek state should recover illegal state aid to the ailing airline, it overturned
the Commission\'s decision to seek similar redress for smaller non-notified aid such
as non-payment of VAT and airport charges.

\"The Commission decision of 2002 does not contain an adequate statement of reasons
in regard to tolerance of non-payment of charges due to Athens Airport and VAT on
fuel and spare parts,\" the European court of first instance ruled.

The European Union\'s executive arm found in December 2002 that Athens had granted
161 million euros (196 million dollars) in illegal state aid to the airline to help
it restructure between 1998 and 2002.

The Commission\'s hand was strengthened by a May 2005 ruling from the European Court
of Justice, the EU\'s highest court, upholding Brussels\' decision.

The case dates from 1998 when the Commission authorised the payment of aid to
restructure the airline on condition that a strict plan was implemented that foresaw
a combination of cost control and increased productivity.

When the Greek government failed to honor these obligations, the Commission declared
the aid to be illegal as the behaviour was deemed to distort competition.

Olympic Airways has since been rebranded Olympic Airlines although its financial
troubles remain.

Olympic asked the European court to review the validity of the European Commission\'s
decision.

With regard to the restructuring aid, the court rejected all the airline\'s claims
concerning the allegedly wrongful nature of the Commission\'s decision.

It concluded that the Greek government had not submitted a revised restructuring
plan as reqired and that \"the Commission was right to conclude that neither the
company\'s short term nor long term viability had been restored,\" by the state
action.

However the court rejected the Commission\'s line on the non-notified aid, involving
the prolonged non-payment of airport charges due to Athens International Airport,
prolonged non-payment of VAT on fuel and non-payment by Olympic Aviation, an OA
subsidiary, of VAT on spare parts.

The court decided that in these instances \"the Commission\'s decision lacks an
adequate statement of reasons or that the action conferred a real economic advantage
permitting it to be regarded as State aid.

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Contact Details: Athens, Greece