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article imageOlympic and Aegean, the two major Greek airlines, plan to merge

By R. C. Camphausen     Feb 23, 2010 in Business
Greece knows three different airlines, and the two largest ones have announced they will soon merge, pending EU approval. Under the agreement, Aegean Airlines will then operate under the name of Olympic Air, until now their major competitor.
On February 22, the two largest carriers in Greece have announced their intention to merge. The move is regarded as an anticipation of two realities: difficulties ahead based on the country’s economic crisis, and the generally tougher airline competition during the present time of world-wide economic woes. The carriers in question are the recently renewed Olympic Air and Aegean Airlines.
The Financial Times from Feb 24 had the following to report: Analysts expect the creation of a national champion to be complete late this year or in 2011. Aegean Airlines is a listed company with a market cap of about €284m. Olympic Air was bought by investment holding company Marfin Investment Group (MIG) for €177.2m last year.
According to the terms of the agreement, MIG and Vassilakis Group, the main shareholder of Aegean, will have an equal shareholding in the combined entity.
The merger, which requires the approval of the EU and the relevant competition authorities in Greece, would create the biggest carrier in the country with a fleet of 64, mostly Airbus, aircraft.
Aegean flew some 6.57m passengers in 2009 of which 3.75m on domestic routes and 2.82m on international routes. Olympic is estimated to have flown more than 4m last year.
Although the two companies are in agreement, the merger is subject to approval by the European Competition Commission. The new company, if cleared by the ECC, will be listed on the Athens stock exchange and will be lead jointly by the present chairman of Aegean, Mr Th. Vassilakis, and Olympic's Mr A. Vgenopoulos. On a website in Greece, Mr. Vgenopoulos is quoted as saying "The prevailing conditions in the Greek economy as well as in the aviation sector dictate the combination of forces in order to maintain competitive customer prices, protect levels of employment and increase our competitiveness at a European level.
The merger of Olympic and Aegean serves all of those objectives and at the same time preserves and strengthens the Olympic brand name, an inherent piece of our national tradition making all Greeks very proud."
Amid fears that the merger may result in a monopoly and raised fares, a local travel agent remarked that the merger would require some domestic routes to be given up to Greece's third carrier, Athens Air, which would then most likely be able to expand their services and customer base.
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