NEW YORK -- Olympic Airways' new business plan was approved by the
airline's board of directors and by the Greek government. Unlike
many turnaround schemes, the plan aims at building rather than
shrinking the airline.
It includes a major fleet replacement program, retiring old 747s
in favor of new A340s (it just received its fourth); an order for
24 narrow-body aircraft, now under consideration; additional
frequencies to key markets in the U.S. and Europe, and new
long-haul service to points including Sydney, Australia, and
Johannesburg, South Africa.
Once the pride and joy of its founder, Aristotle Onassis,
Olympic has become something of an embarrassment in recent years,
more resembling a third-world carrier than one belonging to a
modern European nation.
Several months ago, Speedwing, the consulting unit of British
Airways, contracted to manage the carrier for the Greek government
and get it into shape for privatization.
Speedwing tapped Rod Lynch, a former head of customer service at
British Airways, to head up a management team made up of retired
but still robust airline executives, "a bit like the Magnificent
Seven," Lynch said.
They found a mess: "The entire service platform had collapsed,"
Lynch said. "Marketing was a forgotten science."
But they also found some encouraging signs: Even as everything
around them deteriorated, the pilots and maintenance workers saw to
it that the airline's safety was never compromised, Lynch said.
They also found an unusual situation: Unlike those of most
government-owned European carriers, Olympic's problems stem not
from overinflated costs but from its "horrendous underperformance
on yields and revenue."
The carrier had a good yield-management system -- Hermes,
marketed by Swissair -- but didn't have people who knew how to run
it, Lynch said. Olympic, in fact, suffered from a serious brain
drain; several Greek start-up carriers had lured away its best
The arrival of the Speedwing team was "like sending in the
cavalry," Lynch said. The first reaction by the carrier's labor
unions was a series of mini-strikes. But the labor unions have
since come around, Lynch said.
"They know the party's over," he said, "and self-interest is a
Olympic already has received two government subsidies and will
receive a third only if the European Union deems it worthwhile to
resuscitate the airline one more time.
If the labor unions try to shut the airline down, the EU can
shut it down for good.
Another positive factor for the Greek line is that tourism to
the country is "upmarket," Lynch said.
"It's archaeology, it's villas," he said, adding that it has
not, like some other countries on the Mediterranean, been overrun
by rowdy holidaymakers on cheap packages.
And the country is looking forward to a tourism bonanza from the
Olympic Games in 2004.