WRITTEN QUESTION P-2182/98

by Konstantinos Hatzidakis (PPE) to the Commission

(3 July 1998)

Subject: Recruitment of pilots for Olympic Airways

The management of Olympic Airways recently decided to recruit 45 pilots to meet immediate requirements from a list of successful candidates which had been drawn up after a competition in 1996. The need for such a decision was confirmed by other relevant bodies of Olympic Airways (Flight Exploitation Directorate) after the decision by the management to cut the company's turnover by 10 %, on the grounds that not even the new programme could be implemented unless 45 pilots were recruited immediately. Despite all this the Ministry of Transport is refusing to endorse the adoption of this decision by the management of Olympic Airways, without giving any reason for its position.

Given that the Commission has already stated that one of the reasons for its refusal to permit an increase the share capital of Olympic Airways is constant government interference in the management of the company, and notably the recruitment of staff, will it say how it views the issue of the approval of the plan to recruit pilots and give its overall view of Olympic Airways in the light of recent developments and notably the new state of affairs created by the judgment of the European Communities' court of first instance in cases T-371/94 and T-394/94 (appeals by British Airways and British Midland Airways against the Commission decision to permit French state aid for Air France)? Does it consider that these developments may have repercussions for Olympic Airways and, if so, what kind of repercussions?

Answer given by Mr Kinnock on behalf of the Commission

(21 September 1998)

The Commission decided on 29 July 1998 that the aid initially authorised in 1994 which it had blocked in 1996 following the failure of the Greek government to respect a number of conditions should, following significant changes made by the Greek government, be allowed since it is now compatible with the EC Treaty. The amount of the aid has however been reduced in order to take fully into account aid that was not authorised by the Commission but was granted to Olympic Airways by the Greek Government.

This recent decision is based on the fact that, after thorough examination, the Commission is satisfied that all the conditions attached to the initial authorisation of the aid are now respected. These conditions include the commitment of the Greek government not to interfere in the management of the company except within the strict limits of its role as shareholder. In the course of the adoption of this decision, the Commission was not aware of any reports of interference by the Greek Government in matters relating to the recruitment of the pilots. The elements mentioned by the Honourable Member will be taken into account when the Commission assesses the way in which aid conditions have been respected. That assessment must be conducted when the Commission considers whether the payment to Olympic Airways of the last instalment of capital injection can be allowed under the Treaty and it will be undertaken in the period before June 1999.

The Tribunal of First Instance annulled the Commission's Decision of 27 July 1994 on French government aid granted to Air France, because the Court considered the Commission's reasoning on two specific aspects of the assessment on the compatibility of the aid with the common market to be inadequate.

The judgement of the Tribunal in the Air France State aid case is likely to have no implications for the Olympic Airways State aid case. The Commission recalls that its initial Decision of 7 October 1994 on Olympic Airways was not challenged before the Court. Moreover, the Commission adopted on 22 July 1998 a new Decision confirming the compatibility of the aid granted to Air France with the common market.