Hungarian government reclaims struggling Malev
Tuesday March 2, 2010
The Hungarian government reacquired control of its flag carrier, Malev Hungarian Airlines, spending HUF25.2 billion ($126.7 million) on a 95% stake that will see the airline return to state control after three years as a privately held company.
The money-losing airline turned to the government for support last fall in the face of losses that reached HUF10 billion in 2008 and were expected to narrow to HUF5-HUF7 billion last year. The Vnesheconombank-backed AirBridge consortium had taken control of Malev in February 2007 and will continue to hold 5% of the carrier.
"The change of ownership is managed by a reduction in the equity of Malev and then a capital increase. Vnesheconombank remains one of the largest creditors. . .This means that its former ownership role is fundamentally changed to that of a creditor," the Ministry of Finance said. The government paid cash and converted old debt in order to acquire the stake. Martin Gauss will remain CEO.
"The majority holding of the Hungarian state has opened the way to the creation of financial stability for the operation of the airline. At the same time the ongoing, intensive restructuring program must be continued partly so that the financial rescue of the company consumes the minimum possible taxpayers' [money], and partly so that the EU does not declare the role of the Hungarian state as banned state support," the Ministry said.
Malev this month announced a simplification of its fleet structure to comprise only 737NGs and Q400s and it has launched several pricing packages and initiatives designed to increase both leisure and corporate passengers. The government said that the airline still is targeting a 2012 profit and that "further tough measures can be expected. . . including, for instance, restructuring of the network, further layoffs, renegotiation of agreements with trade unions and renegotiation of supplier contracts."
It also will have to contend with opposition from Wizz Air, Budapest Ferihegy's second-largest airline. The LCC said it was "outraged" by Malev's renationalization and called for a European Commission investigation into what it called "clearly another case of illegal state aid" that "is discriminatory, distorts competition and provides no benefit to the consumer." Wizz claimed that Malev "is a non-viable business and will remain financially non-viable in the future."
by Brian Straus
ATWOnline
Tuesday March 2, 2010
The Hungarian government reacquired control of its flag carrier, Malev Hungarian Airlines, spending HUF25.2 billion ($126.7 million) on a 95% stake that will see the airline return to state control after three years as a privately held company.
The money-losing airline turned to the government for support last fall in the face of losses that reached HUF10 billion in 2008 and were expected to narrow to HUF5-HUF7 billion last year. The Vnesheconombank-backed AirBridge consortium had taken control of Malev in February 2007 and will continue to hold 5% of the carrier.
"The change of ownership is managed by a reduction in the equity of Malev and then a capital increase. Vnesheconombank remains one of the largest creditors. . .This means that its former ownership role is fundamentally changed to that of a creditor," the Ministry of Finance said. The government paid cash and converted old debt in order to acquire the stake. Martin Gauss will remain CEO.
"The majority holding of the Hungarian state has opened the way to the creation of financial stability for the operation of the airline. At the same time the ongoing, intensive restructuring program must be continued partly so that the financial rescue of the company consumes the minimum possible taxpayers' [money], and partly so that the EU does not declare the role of the Hungarian state as banned state support," the Ministry said.
Malev this month announced a simplification of its fleet structure to comprise only 737NGs and Q400s and it has launched several pricing packages and initiatives designed to increase both leisure and corporate passengers. The government said that the airline still is targeting a 2012 profit and that "further tough measures can be expected. . . including, for instance, restructuring of the network, further layoffs, renegotiation of agreements with trade unions and renegotiation of supplier contracts."
It also will have to contend with opposition from Wizz Air, Budapest Ferihegy's second-largest airline. The LCC said it was "outraged" by Malev's renationalization and called for a European Commission investigation into what it called "clearly another case of illegal state aid" that "is discriminatory, distorts competition and provides no benefit to the consumer." Wizz claimed that Malev "is a non-viable business and will remain financially non-viable in the future."
by Brian Straus
ATWOnline
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