Sunday, July 17, 2016

TrainOSE - A Good Deal Or A Bad Deal?

The Greek TrainOSE was sold to the Italian Ferrovie Dello Stato Italiane (from state-owned to state-owned) for 45 MEUR. I have not yet read any analysis anywhere of this transaction. Obviously, with a price ticket of 45 MEUR, one is inclined to think that this was a give-away. On the other hand, even 45 MEUR could be a good price for Greece. It all depends...

Some years ago, Austria sold its national carrier to Lufthansa. Not only did Austria not obtain a price for the carrier, instead, they had to give Lufthansa a 'gift' of 500 MEUR in order for the deal to close. In retrospect, that 'gift' of 500 MEUR was cheap compared with what Austria would have lost otherwise.

If the Italian state assumes all liabilities of TrainOSE and all future losses, and if - as commentaries suggest - they make substantial investments in TrainOSE going forward, this might indeed be a good deal for Greece. If, as one of my Greek friend says, the Thessaloniki office of TrainOSE alone is worth more than 45 MEUR and can be sold straight away, then it might not be such a good deal.

One can only hope that it will not take too long until details of this transaction are published.


  1. It's a good deal. Seems like that because of it we will avoid a 750 mill penalty for illegal subsidies. Given that the government is obviously not committed to privatization, do not expect to find 'really' good deals here.

  2. There is no question.

    Anything run besides the Greek public will be an improvement. Finally, we are rid of Trainose. The more we reduce the public, the closer we will get to feeling like a normal country with a functioning system.


    1. The experience of the UK in selling state-owned companies to other EU state owned companies (e.g. water privatisation) is not a good one. All the evidence is that the change is negative in results.

    2. Dear Anonymous 11:37AM,

      I am not quite sure what selling a public company in the UK means, but for sure the comparison to Greek Public company's can not be made.

      I have written on this blog endlessly the successes of privatization of Greek Public companies and how they helped the general economy, the reduction of economical burdens to the government public budget and the clarity and growth it has brought Greece.

      Just recently a study came out on all 28 eu nations on the productivity of all public services and companies of all these nations. Greece came in 24th. And the only reason they came in 24th is because the higher education system in Greece ranked 1st and offset all the 28th positions of all other services.

      Although i am all for the idea of public companies and services, but i am not for it under the Greek mentality. Greeks working for the public give very little added value to what they produce (with some exceptions, as i know hard working public workers). Meanwhile they do not see as a job to provide value to the general economy nor the growth of the country. They do not even think to look forward, while they all see the jobs and public companies as something that will serve their own interests.

      1. OTE. Monopoly. Corrupt Business with Loss. Sold. Created growth competition, profit, contributes to taxes, while opened the market to competitors. Overall created jobs. Created new markets.
      2. Kteo: Total unproductive. took 1 day to check one car. Corrupt huge cost for the government and public. Sold. Created a network of businesses which a re profitable, pay taxes, created jobs and provides good and quick services.
      3. Piraeus Container port. Corrupt. Hugely overly paid workers. Completely unproductive. Strikes every month. To get a container out of their took more than the shipment from a different country. Strikes would have the cost of goods on the ships be serviced by the buyers. Causing huge up charges on any imports. Meanwhile exports where affect as foreigners did not want to do business with Greece because of the uncertainty of receiving their goods. Sold.
      One of the most productive ports in Europe. Created more jobs. Hugely added value and room for more growth. Help the private economy. Pay taxes.

    3. 4. Airport and 15 peripheral Airports. Ellinkos was a disgrace. Unproductive, over expensive. Crappy airports. high costs. low security. Slow services very business unfriendly. Spata sold. Stream line airport. Productive profitable, pay taxes, has more jobs than before, excellent services, business friendly, helps greek tourism industry. The 15 peripherals thankfully will follow.
      5. Olympic airways. Gifted from onasis. The top airline private airlinr of the 60;s and 70's. Where people ate with silver ware!!!!!! The greek public turned into the one of the biggest ****holes of all businesses. Workers barely worked. overly paid, terrible service. Workers flied their families for free everywhere. Pilots made one flight and sat for 7 days. CLOSED THANK GOD! Now working under Aegean a private company which is profitable, with a star alliance. Good jobs, profitable, growth, and will work very well with the new peripheral airports and will contribute to again TOURISM.
      6. TRAINOSE: was in loss by 1 billion a year in 2010 even with the government subsidies says it all. They even bought trains which do not fit on the rails for gods sake. Corrrupt, un transparent. no contribution. Buyer is the 3rd largest train company in Europe. Will god willing and hopefully with forward thinkers reface Greece as a hub for southern Europe. will also a network to be built within the Balkans.
      7. Ellinikos Property. Sold finally. It has been sitting there for 10 years for god sake. In the richest area of southern Athens as a dump. Along with the newly cvreated Niarchos library this development plan will create 1 % of Greece gdp. It will creat 20,000 immediate jobs and likewise further on.

      we have about 10-15 more privatizations to be made. God willing they will be made with the next 5 years. With all these great actions, Greece in 10 years will be a normal country and a leader within t he Balkans, if only people *ahem* take the head out of the hole in the ground.


    4. Nobody in his right mind can dispute the disaster that is called the Greek public sector. My view is that privatisation is not a panacea for these ills -- not least because most of the faults are cultural and are frequently found in the private sector of Greece as well. In fact, some of the worst practices in the private sector arose from collusion with politicians and bits of the public sector...

      So, I do not share your optimism that privatisation is going to solve major problems. To my mind, it will create some new ones and only partly address the old ones. However, we can probably agree that something drastic is needed...

  3. @V.
    A small correction if I may. The higher education in Greece did not rank first. What was evaluated in the category education was:
    -The number of people in higher education.
    -The expenditure on education as a percentage of GDP.
    In those 2 subcategories Greece shared the top ranking with Belgium, Denmark, Estonia, Spain and Sweden.
    The education in Greece, in spite of the high expenditure and participation, still ranks far below par for Europe, and falling.