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Malev is renationalised

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  • Malev is renationalised

    Hungary's Government has stepped in to rescue struggling flag-carrier Malev, retaking control of the airline three years after its privatisation.

    The Government, via state holding company MNV, has agreed to acquire a 95% stake in Malev through a Ft25.2 billion ($127 million) investment funded partly by cash and partly by debt conversion.

    Malev is in financial difficulty and the new agreement states that its equity situation and liquidity "need to be resolved". It adds that the pact aims to ensure that steps needed for the "rescue and restructuring" of Malev are carried out in a "timely and efficient manner".

    The finance ministry says that the acquisition will clear the way towards creating stability for the troubled airline. But the ministry warns that "intensive" restructuring is required in order to minimise the burden on taxpayers and ensure that the rescue does not constitute illegal state aid.

    Malev is to become profitable by 2012 at the latest, it says: "In order to achieve this, further tough measures can be expected in the operation of the company." These will include employee layoffs, network reorganisation and renegotiation of supplier contracts.

    Malev was sold, in its entirety, to the private group AirBridge in 2007, in a bid to improve the flag-carrier's prospects.
    But the subsequent poor economic climate obstructed Malev's development. AirBridge's shareholders included Russian entrepreneur Boris Abramovich, whose airline operations - including KrasAir - subsequently collapsed, and his stake in AirBridge was transferred to financial firm Vnesheconombank.

    Under the deal AirBridge retains a 5% share in Malev. Vnesheconombank is no longer a stakeholder but becomes a major creditor of the airline.

    Vnesheconombank is to provide €32 million ($44 million) to MNV under a loan repayment guarantee, and Malev will replace loans obtained on unfavourable terms with lower-interest borrowing.

    Malev chief executive Martin Gauss will remain in his position.

    It seems that another European flag-carrier will be receiving illegal state aid.
    TAP - Transportes Aéreos Portugueses

    Voe mais alto. Fly higher.

  • #2
    Originally posted by TAP-A343 View Post
    It seems that another European flag-carrier will be receiving ilegal state aid.
    Meh, Hungary just has finally figured that since it has worked for decades for carriers like Alitalia, Olympic, they would be stupid not to try the same with Malev.

    IMHO, (re-)nationalising is the European equivalent to CH11 in the US.


    • #3
      EU simply has too many airlines. Its economy and maturity of development is comparable to that of US. Its population is about 50% higher than US but its size is about 50% of that of US. The major population centres are much better connected with railways than those in US. But there are so many small national carriers in Europe that only operates one hub. These carriers simply do not have the economies of scale to operate profitably. At the end of the day, the only full-service carriers that can survive in this market are BA, LH and AF. TAP and Finnair have found their niche to become the European gateway to Brazil and Asia respectively because of their geographic advantage. Other than TAP and Finnair, I don't think the future for the other carriers are too bright. We are already seeing consolidations of other national carriers into these three carriers. The consolidations will simply continue.
      None Planned


      • #4
        It's kinda like JAL, another airline is being saved by the govt. I don't think Malev will follow the same road like Sabena, the govt will keep them around not matter what, they're the country's flagship carrier, and will only go away unless the airline is economically not worth keeping around. You got a good point there CathayPacific, they're just so many carriers for in a specific area that trains would be better off in some cases but in the end, unless all trains in Europe become bullet trains, people will choose plane over train. At least Malev won't be the next carrier to be eaten up by Lufthansa, Lufthansa have too many problems to deal with right now. Also, at least Hungary is in a better situation that Greece right now.
        what ever happens......happens


        • #5
          So, does this mean the return of the -154?