The Hungarian government is searching for new ways to save its financially distressed national carrier Malev and may be prepared to let it fail.
Development Minister Tamas Fellegi says negotiations with a potential European investor are at an advanced stage and could be concluded by next year. Business daily Vilaggazdasag reported on Tuesday that the government is in talks with Unimex Group, the parent of Czech charter airline Travel Service.
The initiative comes as Chinese HNA Group indicated it is no longer interested in Malev. Fellegi claims Hainan was never looking at buying Malev, but was instead exploring ways of cooperation.
A decision on the sale of Malev would not be made before a European Commission decision on alleged illegal state aid for the airline. Fellegi concedes that the EC may well rule the financial support was illegal, forcing the airline to pay back several billions of forint in subsidies. As late as November, the government was mulling another 5 billion forint ($21 million) capital increase for the airline.
Efforts to sell the airline have turned into a never-ending story. Numerous attempts have failed and the government bought back the airline from Russian Vnesheconombank last year to keep it flying. Over the years, the airline has survived only because of massive government support. But it is buried under huge debt that makes it unattractive for any potential investor. The government could try to take over that debt, as has happened in other cases of privatization, such as the Austrian Airlines sale to. “The focus is not on Malev, but air travel,” Fellegi says.