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Brussels approves the acquisition of Olympic Air by Aegean

09 October 2013 / 19:10:50  GRReporter
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"Once Olympic Air would be out of business, Aegean would become the only significant service provider in the country and would gain the market shares of Olympic Air. Therefore, Olympic Air would no longer compete with Aegean. So, the transaction causes no harm to competition that would not have occurred anyway."

European Union Competition Commissioner Joaquin Almunia said, "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. We approved the merger because it has no additional negative effect on competition."

The European Commission stresses, "The research of the market has revealed that, in the near future, it is not expected that other airlines will enter the market. This is due to a variety of reasons, including the fact that potential entrants see more profitable opportunities elsewhere, they consider the cost of entry too high or they prefer to stay away from the Greek domestic market due to Greece’s current dire economic situation."

Moreover, the thorough research conducted by the Commission has revealed that, in any event, Olympic Air is a failing cokmpany and would cease its activities soon. After its privatization in 2009, Olympic Air has never been profitable and has received significant financial support from its sole shareholder, Marfin Investment Group (MIG). A detailed analysis of Olympic Air’s business prospects has confirmed that it is almost impossible for the company to become profitable in the near future under any investment plan. Therefore, Marfin Investment Group has decided to discontinue its support for Olympic Air if the latter is not sold to Aegean which, in the short term, would mean termination of the activities of Olympic Air.

Furthermore, the research of the market has confirmed that there is no other reliable buyer other than Aegean, who is interested in acquiring Olympic Air. No interest has been expressed in the acquisition of Olympic Air’s assets, including its brand. Consequently, the most likely scenario is that the assets of Olympic Air will leave the market completely if the proposed transaction fails.

The European Commission has therefore concluded that the potential negative effects on competition due to the withdrawal of Olympic Air as an independent competitor will not be due to the transaction. Consequently, the transaction is compatible with the domestic market and should be approved.

Aegean’s communication regarding the approval of the transaction

Aegean has issued a statement on the approval of the acquisition of Olympic Air, which reads, "The approval by the European Union regarding the acquisition of Olympic Air creates conditions for the establishment of a viable and dynamic Greek airline, competitive within the region and capable of supporting a growth momentum, which will benefit Greek tourism and the local economy."

The company states that Aegean will complete the acquisition of Olympic Air’s shares and the assumption of its management by 18 October 2013. The total cost of the transaction amounts to 72 million euro, 20 million euro of which have already been paid. After the completion of the transaction Olympic Air will become a subsidiary of Aegean, which is listed in the stock exchange, and the merger of their administrative functions will begin immediately.

Both companies will retain their names and logos and they will operate separate flights and fleets.

Aegean’s president Theodoros Vassilakis said, "As of today, our obligation and commitment to serve our country and our passengers have become even greater. While growing in size we also have to further improve our services, to be more effective in the support of all Greek regions and ensure competitive access to the smallest Greek island."

"The economies of scale will allow us to offer more competitive fares to our domestic network, and especially to the small islands. At the same time, the synergies will allow us to support an improved growth rate for our international network, both from Athens and the periphery, thus contributing substantially to the development of tourism and the economy", said Vassilakis.

Tags: Olympic AirAegeanAcquisitionApprovalEuropean commission
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