Greece's Aegean Airlines and Olympic Air try once again to combine forces

Greece's largest passenger carrier, Aegean Airlines, has reached agreement with the shareholders of its main rival Olympic Air to buy the airline for EUR72 million, marking a third attempt to re-consolidate the Greek air transport market and survive in a dire - to say the least - environment as the country is in its fifth consecutive year of economic contraction. In contrast with the proposed union in 2010, which was blocked by the European Commission on competition grounds after a 10-month investigation, the present deal is not a merger but an outright acquisition of Olympic Air by Aegean. Olympic Air would become a subsidiary of Aegean, with both airlines maintaining their brands and distinct liveries.

The parties argue that the combination is necessary to effectively compete within the European aviation market and shield the two carriers against continued losses and further reductions of size and scope. Aegean posted a net loss of EUR27.2 million in 2011 and Olympic Air recorded a deficit of EUR37.6 million as its revenue and passenger numbers continued to decline. Olympic's passenger numbers fell 23% in 2011 to 3.4 million from 4.4 million in 2010 and decreased 14.5% to 1.4 million in 1H2012 compared to the year-ago period.