EU Clears Takeover of Failing Olympic Air
(CN) - European regulators gave Aegean Airlines the green light Wednesday to take over the nearly bankrupt Olympic Air, leaving Greece with only one major domestic air carrier.
The European Commission expressed concern about the merger in April, finding it would give Aegean a monopoly on routes to six regional cities and reduce competition on three others. Regulators blocked a similar deal between the airlines in 2011.
But the commission reversed course Wednesday and approved the $97.5 million deal, noting that Olympic Air only had a matter of months to survive without the merger. The airline never achieved profitability after it was privatized in 2009, and its sole shareholder - Marfin Investment Group - told commissioners it planned to pull the plug if the deal with Aegean Airlines did not go through.
"It is clear that, due to the ongoing Greek crisis and given Olympic's own very difficult financial situation, Olympic would be forced to leave the market soon in any event," said Joaquin Almunia, who oversees the commission's competition policy. "Therefore we approved the merger because it has no additional negative effect on competition."
Dire economic conditions in Greece have dried up domestic demand for air travel, and the high cost of entering the Greek market make it unlikely that competing airlines will set up shop in Greece in the near future either, according to the commission.
"The commission has therefore concluded that any competitive harm caused by Olympic's disappearance as an independent competitor is not caused by the merger," the commission said.
Olympic Air had been Greece's flag carrier until 2009, when the government divested its interest to Marfin. Aegean will continue to operate both Olympic and Aegean brands, the airline said.