Aegean Airlines, Olympic Deal Blocked by EU Regulator
Stock Chart for Aegean Airlines SA (AEGN)
Aegean Airlines SA’s plan to merge with unprofitable Olympic Air SA was blocked by European Union antitrust regulators over concerns that it may harm competition.
“We had no choice but to prohibit” the deal, EU Competition Commissioner Joaquin Almunia told reporters in Brussels today. “The airline resulting from the merger would have had a quasi-monopoly. This would have led to higher fares for airline passengers in Greece.”
Greece’s two biggest airlines said in February 2010 that the deal was necessary to protect jobs, increase routes and ensure the long-term viability of both companies. Aegean and Olympic would together have 5,850 workers and a combined flight network of 106 routes, the two airlines said last year.
It’s the first time the Brussels-based regulator has blocked a deal since it stopped Ryanair Holdings Plc from taking over rival Irish carrier Aer Lingus Group Plc in 2007 because the airlines would control most Irish flights and have the power to increase prices.
Aegean and Olympic said in a joint statement that they would review the EU decision and “decide their possible further actions within the framework of existing legislation.” They have the right to appeal the EU ruling.
The two carriers control more than 90 percent of flights within Greece and compete head-to-head on nine major routes within the country, the European Commission said in an e-mailed statement. There were “no realistic prospects” of a new competitor entering the market.
The EU decision “will have negative consequences for consumers as well as our country’s economy,” said Andreas Vgenopoulos, chairman of Olympic’s owner Marfin Investment Group in a statement.
Theodoros Vassilakis, chairman of Athens-based Aegean, said “an important opportunity” for airline consolidation “has been lost.”
Shares in Aegean Airlines rose 1.4 percent, or 3 cents, to 2.16 euros as of 2:21 p.m. in Athens trading. Shares in Marfin gained 2.9 percent, or 2 cents, to 70 euro cents.
A proposal from Aegean and Olympic to hand over take-off and landing slots at Greek airports wouldn’t have eliminated competition problems, the EU agency said. The commission said a survey of airlines showed that the offer was “unlikely to entice a credible new player” to base a competing service at Athens airport.
Almunia said EU decisions to ban takeovers “will remain very rare since in most cases we are able to accept the solutions offered.”
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