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Aviation: Further consolidation predicted as Aegean acquisition of Olympic approved

Aviation lawyers expect further consolidation within the airline industry as Aegean Airlines was on Wednesday (9 October) given the all clear to buy troubled Olympic Air, led by White & Case and Baker & McKenzie.

The European Commission (EC) took the first-time step of reversing its earlier decision to block an acquisition attempt in 2011, approving the buyout from investment group Marfin.

Aegean was represented by White & Case led by Brussels-based competition partners Mark Powell and Assimakis Komninos. Baker’s competition partner Gavin Bushell, also based in Brussels, assisted Aegean on the transaction.

Komninos said: ‘The decision is very welcome news for the Greek airline sector and for Greek passengers as it will permit badly needed consolidation that will allow Aegean to compete more aggressively on the European stage.’

One aviation partner at a top City firm added: ‘The Olympic Air saga was a Greek tragedy. The EC had ruled [in 2002] that the airline had received illegal state aid that must be paid back. With Greece on its knees Olympic collapsed into insolvency.’

The EC’s decision to reverse its 2011 ruling was largely based on the fact that if Aegean was not permitted to acquire Olympic, it would cease trading. As reported by Reuters, EU Competition Commissioner Joaquin Almunia said: ‘It is clear that, due to the ongoing Greek crisis and given Olympic’s own very difficult financial situation, Olympic would be forced to leave the market soon in any event,’ adding that the merger would have no additional negative effect on competition.

The move comes as aviation lawyers predict further consolidation at the smaller end of the market, with one aviation partner commenting: ‘People are still making money in aviation, although it is a difficult period for the industry. I fully expect some airlines to go bust this winter.’

This situation is in stark contrast with the proposed $11bn merger between dominant American Airlines and US Airways, which was blocked by the US Justice Department this summer. The deal, which would have created the world’s biggest airline, saw a clutch of leading US firms secure roles including Latham & Watkins, Weil Gotshal & Manges, Paul Hastings, Debevoise & Plimpton and K&L Gates.