Hungary’s Malev Airline Halts Flights
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PARIS — The Hungarian national airline Malev on Friday halted all flights Friday after creditors began seizing its planes outside the country over unpaid debts — becoming the second carrier in a week to succumb to Europe’s economic woes. Enlarge This ImageBernadett Szabo/ReutersMalev planes on the tarmac at the Ferenc Liszt International Airport in Budapest on Thursday. The state-owned airline has been losing money for years and is carrying 60 billion forint, or $270.5 million, of debt. On Thursday, a court in Budapest placed Malev under the control of a bankruptcy trustee, saying the airline could make payments only as essential to continue offering service. The government — which is itself seeking help from the European Union and International Monetary fund to handle its own heavy debt load — had hoped the court move would stave off the claims of creditors while Malev — a member of the Oneworld alliance — drew up a restructuring plan. But with the airline’s future in doubt, creditors at airports in Ireland and Israel refused to allow Malev aircraft to take off, necessitating the decision to ground the airline, Prime Minister Viktor Orban as said Friday on Kossuth radio, according to Reuters. “We tried to keep Malev operational as long as possible,” Mr. Orban was quoted as saying, “but we could no longer do it as we would have lost our aircraft seized abroad.” Mr. Orban said that with a restructuring to reduce debt, he hoped the airline could be reborn. Malev’s situation had been more tenuous since the European Commission ordered it in January to repay about 100 billion forint of state aid, including loans and debt deferrals, that it had received between 2007 and 2010. The commission, which polices Europe’s competition rules, said there was no reason to believe that Malev could turn itself around. Malev and other airlines that have relied on state support to stay afloat are seeing the flow of government cash dwindle as Europe’s protracted sovereign debt crisis forces governments to cut spending. Spanair, based in Barcelona, collapsed on Jan. 27, stranding 23,000 passengers. The Spanish airline had been kept aloft with the help of €150 million, or about $200 million, of subsidies from regional authorities in Catalonia. Such carriers, which turned to governments after failing to drum up support from private-sector investors, are likely to find access to new funds difficult in the current environment, analysts said. “There will be more airlines like Malev facing a squeeze on revenue and profit generation in 2012,” said Paul Sheridan, an analyst at Ascend, a London-based aviation consultancy. “They will also be facing lack of access to finance and the rising cost of finance.” Among the groups that has expressed interest in new European acquisitions is International Airlines Group, which owns British Airways and Iberia. IAG made a failed attempt to buy a significant stake in LOT in 1999 and last year its chief executive, Willie Walsh, expressed interest in TAP’s links to the fast-growing Brazilian market. Turkish Airlines, which is 49 percent government owned, said this month that it was actively studying a bid for LOT.
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