* EU sees risk of Olympic closure if no deal-source
* Would be first approval for deal it previously rejected
(Adds comments by Aegean, lawyer comments)
By Foo Yun Chee
BRUSSELS, Oct 2 Greece's Aegean Airlines
is set to secure European Union approval for its
second bid for Olympic Air after convincing competition
regulators its rival is likely to close down if the deal is
blocked, two sources with knowledge of the issue said on
Aegean has said the proposed 72 million-euro ($96.38
million) acquisition is crucial for the viability of both
airlines. Domestic demand in Greece has continued to drop as the
country enters its sixth year of recession.
The European Commission rejected Aegean's first attempt to
buy Olympic in 2011 from investment group Marfin
because of the combined company's quasi-monopoly in the Greek
air travel market.
"Olympic would likely close down without the merger," said
one of the people who declined to be named because of the
sensitivity of the matter.
The source said EU Competition Commissioner Joaquin Almunia
is set to announce his approval of the deal on Oct. 9.
Almunia's spokesman Antoine Colombani said: "The Commission
has not yet taken a decision in this case."
"Aegean has not received any notification or information
with regards to the final outcome. We will wait for the final
decision on October 16," the carrier's spokesperson said,
referring to the Commission's scheduled deadline.
The regulator's approval would be the first time that it has
cleared a deal it previously rejected. Ryanair made
history when the Commission vetoed its third acquisition bid for
Aer Lingus in February.
"While it's highly unusual for a competition authority to
approve a transaction that it had earlier blocked, the
Commission will no doubt point to the change of circumstances
and material change of facts since its prohibition decision in
2011," said one antitrust lawyer familiar with the market.
Olympic, founded in 1957 by the late shipping magnate
Aristotle Onassis, went into a steady decline after being
operated for decades by the Greek government, saddling the state
budget with losses.
(Additional reporting by George Georgiopoulos in Athens;
Editing by David Cowell)