The European Commission took Greece to court today for failing to recover hundreds of millions of euros in state aid from Olympic Airlines, a move that may mean the end of the troubled carrier.
Closely watched by competitors eager to open up room in a crowded European aviation sector, the airline founded by tycoon Aristotle Onassis has amassed debts over decades of mismanagement and repeated efforts to privatise it have failed.
Greece said it would defend its position in court while trying to come up with another rescue plan for the airline and that Olympic would keep flying until at least October.
"What is certain is that it will continue to operate at least until September-October," Finance Minister George Alogoskoufis told reporters.
The European Union executive said it would send Greece to the European Court of Justice for not complying with its September 2005 decision to recover illegal aid and unpaid taxes from Olympic Airways and its successor Olympic Airlines, confirming a Reuters report.
In the latest step in the years-long EU-Greek dispute over Olympic, the Commission said Greece had failed to quantify the amount of aid and taxes that must be paid back, which could run as high as €540 million.
"This whole situation has led to the depreciation of the company," said Gregory Karagiannopoulos from Cyprus Securities. "If it shuts down, the political cost will fall on the government."
Shutting down Olympic would not only put about 6,000 staff on the street but end a national symbol and put into question the vital connection of remote Greek islands with the mainland, now mainly served by Olympic.