| Published date | 24 August 2010 |
| Official Gazette Publication | Diario Oficial de la Unión Europea, L 222, 24 de agosto de 2010 |
2010D0459 — EN — 24.08.2010 — 000.001
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
| ►B | COMMISSION DECISION of 17 September 2008 on State aid C 61/07 (ex NN 71/07) — Greece Olympic Airways Services/Olympic Airlines (notified under document C(2008) 5073) (Only the Greek text is authentic) (Text with EEA relevance) ►C1 (2010/459/EC) ◄ (OJ L 222, 24.8.2010, p.62) |
Corrected by:
| ►C1 | Corrigendum, OJ L 231, 1.9.2010, p. 7 (459/2010) |
▼B
COMMISSION DECISION
of 17 September 2008
on State aid C 61/07 (ex NN 71/07) — Greece Olympic Airways Services/Olympic Airlines
(notified under document C(2008) 5073)
(Only the Greek text is authentic)
(Text with EEA relevance)
►C1 (2010/459/EC) ◄
THE COMMISSION OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Community, and in particular the first subparagraph of Article 88(2) thereof,
Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,
Having called on interested parties to submit their comments pursuant to the above Articles (1), and having regard to these comments,
Whereas:
PROCEDURE| (1) | By letter dated 19 December 2007, the Commission informed Greece of its decision to initiate the procedure provided for in Article 88(2) of the Treaty in respect of a number of financial flows and transfers which gave rise to issues of State aid concern in connection with the financing and operations of Olympic Airways Services SA and Olympic Airlines SA. |
| (2) | On 14 January 2008 Greece requested an extension of the deadline for its reply which was accepted by the Commission. Greece transmitted its comments on 13 February 2008. |
| (3) | The Commission’s decision to initiate the procedure was published in the Official Journal of the European Union (2). The Commission invited interested parties to submit their comments on the measures in question within one month of the publication date. |
| (4) | The Commission received comments on the subject from interested parties. It transmitted the comments to Greece by electronic mail of 9 April 2008. Greece was given the opportunity to respond to these comments, the Commission received Greece’s observations by electronic mail dated 13 May 2008. |
DESCRIPTION OF THE FACTSThe partiesOlympic Airways Services SA| (5) | Olympic Airways Services SA is the current name of the company formerly known as Olympic Airways SA (3). It is primarily involved in the provision of ground-handling and aircraft maintenance/engineering services in Greece and does not operate any aircraft. It is 100 % state-owned. |
Olympic Airlines SA| (6) | Olympic Airlines SA began operation in December 2003 and was established from the flight divisions of Olympic Airways. It operates scheduled air services within Greece on intra-EU and inter-continental routes. It is 100 % state-owned (4). |
Measures under investigation| (7) | The opening decision investigated the following four areas: —Potential State aid to Olympic Airways Services SA through forbearance of debts The Hellenic Republic may have granted illegal and incompatible State aid to this company through its continued forbearance towards Olympic Airways in relation to its tax and social security debts since January 2005 (5). —Potential State aid to Olympic Airways Services SA by means of arbitral panel awards The Hellenic Republic may have granted illegal and incompatible State aid to Olympic Airways Services in connection with payments made in respect of a number of arbitral panel decisions. These decisions result from a number of damages actions taken by this company against the State. —Potential State aid to Olympic Airlines SA: The Hellenic Republic may have granted illegal and incompatible State aid by means of aircraft lease payments and non-execution of its debts (including tax and social security liabilities) against this indebted State owned company since June 2005 (6). —Potential State aid to Olympic Airways Services SA and to Olympic Airlines by means of special creditor protection: meaning that no legal action or individual or collective enforcement measures (includes precautionary measures and injunctions) may be taken, in Greece or abroad, against either company by any private creditor. This legal protection is not granted to any other entity in Greece and is specific to these companies. Any other company in Greece seeking such creditor protection would have to go into bankruptcy. |
| (8) | The potential State aid to Olympic Airways Services by means of the arbitral panel awards requires further, more detailed examination. It is therefore excluded from the scope of the current decision and will be dealt with in a separate later Commission decision. |
Tax and social security debts of Olympic Airways Services since December 2004| (9) | In its 2005 Decision the Commission identified a pattern of behaviour whereby the State did not collect its taxation and social security liabilities from Olympic Airways when these fell due, these debts would then be ‘certified’ against the company but no execution of this debt would be undertaken by the State. Over time the company would make partial payments by instalment (7). In the 2005 Decision the Commission concluded that the delayed or under-payment of taxation and social security liabilities by Olympic Airways provided a cash flow benefit to this company at the expense of the State. |
| (10) | In the 2005 Decision (Article 3 thereof) the Commission obliged Greece to ‘immediately suspend all further payments of aid to Olympic Airways and Olympic Airlines’. On several occasions (8) the Commission requested the Greek authorities to provide information on how it had implemented this aspect of the decision. And to provide Commission services with information regarding the tax and social security contributions paid by this company to the State. Notwithstanding these repeated specific requests the Greek authorities have failed to provide adequate information in this regard. |
| (11) | Far from providing the Commission services with information and confirmation that these companies are paying their tax and social security debts in full and on time the information provided by the Greek authorities to the Commission and to the European Courts is such as to suggest that the two companies Olympic Airways Services and Olympic Airlines cannot and do not discharge their ever-increasing debts to the public authorities. |
| (12) | By letter dated 30 October 2006 (9) the Greek authorities provided the Commission services with a letter dated 13 June 2006 from an ‘independent assessor’ called ‘Progressive Finance’ on the subject of the financial situation of Olympic Airways. The expert based itself on the 2004 Balance Sheet (not provided to the Commission) and the 2006 Cash Flow. The expert concluded that, on the basis of the information at its disposal, the company’s negative financial situation was directly related to its obligations to the State and to the social security administration and the outstanding State aid issues. ‘Progressive Finance’ also stated that on the basis of the 2006 Cash Flow, the company is not considered creditworthy and it had no possibility of contracting and servicing a loan to repay the State aid identified in the 2005 Decision. |
| (13) | Furthermore, in the context of Case T-423/05 R, Olympic Airways was asked by the President of the Court of First Instance to provide the Court with information on its capacity to repay the State aid identified by the Commission and its level of indebtedness. |
| (14) | By letter dated 27 November 2006 the company provided the Court with a report by the independent expert PriceWaterhouseCoopers on the possibility of a repayment by instalments of aid and an assessment of the aid that had been repaid following the negative Commission Decisions of 2002 and 2005. |
| (15) | Olympic Airways’ expert (PwC) calculated the amounts to be recovered as a result of the 2005 Decision at EUR 411 million, which it said could be refunded in 48 monthly instalments and which, having regard to the debts owed to the Social Security administration, could be extended to 96 instalments only following a legislative modification. The expert however acknowledged that ‘the analysis of Olympic Airway’s cash flows as they were provided us by the company (and which, for lack of time could not be subject to a detailed control as to their exactitude and their exhaustiveness) leads to the conclusion that the eventuality of a total or partial repayment of the amounts due is not possible’. |
| (16) | In its opening of the investigative procedure the Commission reached the preliminary conclusion that the obligation to suspend all further payments of aid to Olympic Airways contained in Article 3 of the 2005 Decision has not been respected. Furthermore, the Commission came to the preliminary conclusion that Olympic Airways is not paying its tax and social security liabilities in full and on time and cannot even pay its existing debts and that this behaviour is only possible due to the forbearance of the State. |
State aid to Olympic Airlines since 2005| (17) | In relation to Olympic Airlines the Commission in its 2005 Decision identified as State aid granted to Olympic Airlines the ‘Acceptance by Olympic Airways and by Greece of lease payments from Olympic Airlines for the sub-leasing of aircraft which are lower than the amounts paid for head leases …’ |
| (18) | The Hellenic Republic (10) did not dispute the fact that the State and Olympic Airways had sub-leased the aircraft |
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