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BA drops Olympic bid
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June 2, 2000: 8:48 a.m. ET
Struggling Greek airline left to look for new partner after UK carrier bows out
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LONDON (CNNfn) - British Airways has dropped its plan to take a stake in Olympic Airways, the Greek government announced on Friday, leaving the troubled Greek flag carrier without a potential partner.
BA had an option to take a 20 percent stake in Olympic, the last wholly state-owned national carrier in Europe, after Greece last year hired the U.K. company's consulting arm Speedwing in an attempt to stem a decade of heavy losses.
Speedwing executive Rod Lynch, who took over as Olympic chief executive in 1999, is expected to leave having recently clashed with unions over his plans to cut jobs. The airline is expected to lose $59 million this year.
"British Airways is not willing to exercise its option," Greek Finance Minister Yannos Papandoniou told reporters after a meeting with senior BA officials. "A new tender for a minority stake along with management will be called."
Analysts suggested the two sides failed to reach agreement on a valuation for the carrier. The government said it still aims to find a partner to buy a stake this year.
 However, analysts said Olympic, long seen as the basket case of the European aviation industry, was far from being an attractive proposition, given a long history of political complications and difficult labor relations.
The Greek state in 1993 bailed the company out with a massive capital injection, but successive managements have failed to sustain a recovery in its fortunes.
Lynch and his team began restructuring the airline last October to try to return it to profit by 2003. This involved the sale of non-core businesses such as property and catering, the extension of the airline's route network, and a complete overhaul of its aircraft fleet, making Olympic the first European customer for Boeing's new 717 (pictured).
BA is restructuring its own European partnerships this year, holding a 10 percent stake in Spain's Iberia while selling its French unit Air Littoral to Swissair. It was also reported to have held merger talks with KLM Royal Dutch Airlines. 
-- from staff and wire reports
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