Russian state buys stake in Malév

The on-going saga of Hungary’s troubled flag carrier, Malév, entered another chapter, with news that the Russian state has indirectly purchased a stake in the badly indebted airline. Vnyesekonombank, a state-owned Russian financial institution, is reportedly preparing to take control of a 49 percent stake in AirBridge Zrt., the company which owns Malév Hungarian Airlines. In order to ensure that Malév retains its status as Hungary’s national airline and, by extension, does not have to forfeit its European Union operating license, Magdolna Költő and Kálmán Kiss–two Hungarian businesspeople–will together control 51 percent of the company’s shares. János Veres, Hungary’s finance minister, met with Russian Deputy Prime Minister Victor Zubor and confirmed that the airline’s new structure will safeguard its Hungarian national status. The new arrangement became necessary after Boris Abramovich, the Russian businessman who purchased Malév in 2007 following its privatization by Hungary’s Socialist government, failed to satisfy most conditions of the agreement and was removed from AirBridge Zrt’s executive.

Despite the assurances, there is no doubt that Russian state interests will now dominate Malév. According to the terms of the new deal, the Hungarian flag carrier will strike a partnership with Aeroflot, Russia’s state-owned national airline. Malév is struggling under the weight of a debt, which has now reportedly reached 20 billion forints. The Hungarian flag carrier owes Budapest Airport Zrt nearly 10 billion forints and since the airline was unable to service its debt in a timely manner, the company had to cede its 15 percent stake in one of its smaller firms, Malév-Lufthansa Technik Kft, and hand ownership over to Budapest Airport’s operator. Additionally, Malév also owes 600 million forints (€2.2 million) to Malév Vagyonkezelő Kft, a Hungarian state-owned company which controls the Malév trademark and owns a gas pipe line running between Budapest’s Ferihegy Airport and the town of Százhalombatta, as well as a Boeing 767-200 aircraft.

Malév currently operates a fleet of 27 aircraft, including 18 Boeing 737 planes, and a handful of smaller, regional aircraft. The airline flies to 50 destinations from its base at Budapest Ferihegy Airport, including regular flights to Tel Aviv (Israel), Beirut (Lebanon) and Damascus (Syria).

Canadian Hungarian Journal