Hours before Marfin Investment Group (MIG) reportedly threatened to walk away, the Greek government sealed a deal on March 6 with the countrys largest buyout firm MIG for the sale of Olympic Airlines. The Greek government said that it will still require the green light from the European Commission for the deal to become binding.

"The result of agreement of advisers will be placed under the crisis of two-ministerial committee of privatisations, which will first wait for the European Commission's approval on this issue," Greek Development Minister Costis Hatzidakis said. But analysts noted that was just a formality. The deal involving MIG comes a month after the conservative government made a last-minute appeal for investors to rescue Olympic, after an international tender failed to produce satisfactory offers.

Marfin submitted a 62.4-million-Euro bid for Olympics flight operations and technical maintenance base. The government said MIG will be bound to take over the ground-handling unit, totaling 44.8 million Euro, if negotiations with Swissport, a subsidiary of Spains Ferrovial, fall through. "All the advisors of the government have informed us that negotiations with MIG for the sale of Olympics flight operations and technical maintenance has had a successful end," Hatzidakis said. "For the ground handling, the discussions of MIG and Swissport on the completion of a commercial agreement between them continue and it was asked and was granted a one-week extension in the exclusive negotiations with the state."

MIG chief executive and head of the Panathinaikos Unity Movement Andreas Vgenopoulos had announced his interest in acquiring Olympic and had reportedly given a deadline of March 6. Earlier last week, the government received two more bids to acquire the airline by Chrysler for 210 million Euro, and by Greek private carrier Aegean Airlines. Although Aegean, which is Olympics main competitor for Greeces domestic routes, offered an attractive proposal of 170 million Euro to purchase the ailing airline, many expressed fears that the sale could create a monopoly and eventually be blocked by the European Commission. Founded in 1957 by shipping magnate Aristotle Onassis, Olympic steadily declined after being operated for decades by the state, with reported losses of 450 million Euro a year.

The government has spent years seeking private investors to take over the airline, but the process has been complicated by the European Commissions demand that the company repay unlawfully- distributed state aid. The last attempt to privatise the airline was September 2008, when the government floated a tender to split the loss-making airline into three units - flying, ground handling and aircraft maintenance - to facilitate a sale.