The European Commission is set to order Olympic Airways to hand back €194 million in illegal state aid, EU officials said today.
Athens has defended its national carrier fiercely, arguing it plays a vital role in uniting the country's scattered islands with its mainland.
The government also wants to ensure Olympic acts as flag carrier for the 2004 Athens Olympic Games.
"The Commission has the intention to take a decision, probably tomorrow, on Olympic Airways. It might ask for a reimbursement of €194 million," a Commission official told reporters.
He said senior officials of the EU executive had approved the decision, but it had to be confirmed by a meeting of the full 20-member European Commission on Wednesday.
Greece had failed to comply with conditions the Commission set in 1998 on state aid payments and therefore this amount was illegal under EU rules, the official added.
There have been reports that Brussels might order the repayment of up to €300 million. But the Greek government has insisted that it has not given any illegal financial aid to the airline for the past three years.
Transport Minister Mr Christos Verelis said yesterday the airline would keep flying and Greece would challenge in court any decision that demanded a return of state funds.