Malév Hungarian Airlines on brink of bankruptcy according to report
According to a report in Hungary’s Magyar Nemzet daily newspaper, Malév Hungarian Airlines is teetering on the brink of bankruptcy. Some of the flag carrier’s most important partners and creditors are reportedly waiting for Malév to provide payment for services rendered, including Budapest Airport (BA), the privately-owned company that operates the Hungarian capital’s Ferihegy International Airport. Malév relies in large part on a firm affiliated with BA for the refueling of its airplanes. When Magyar Nemzet contacted BA, the airport authority’s spokesperson reportedly noted that the firm was „flexible” in its dealings with Malév, but the paper discovered that Hungary’s flag carrier is only receiving 200 tons of kerosene per day. Malév is forced to purchase the rest of its fuel from foreign airports, where it must make all payments in cash.
Despite Malév’s precarious financial situation, the centre-right daily quoted sources which claimed that allowing Malév to become insolvent would not be in BA’s best interest. Malév reportedly owes more than five billion forints (€19 million) to the Budapest airport authority. Additionally, the Hungarian carrier is still the most prominent airline operating out of Ferihegy Terminals 2A and 2B, despite recent service cutbacks. Malév canceled its long-haul flights to Toronto’s Pearson Airport, as well as to New York-JFK this past summer, along with its Budapest to Cairo route. In recent months, Malév has tried to re-invent itself as a carrier that connects the „regions of Europe,” and it continues to maintain a prominent presence in Eastern Europe and the Balkans, while offering a handful of Middle East flights to Tel Aviv, Beirut and Damascus.
Hungary’s Socialist government privatized Malév last year, selling 99.95 percent of the flag carrier’s shares to AirBridge Zrt, a consortium dominated by Russian interests. Boris Abramovich of Russia’s AiRUnion and KrasAir is currently the chairperson of Malév’s board.
As Malév’s future hangs in the balance, it remains to be seen how Hungarian Prime Minister Ferenc Gyurcsány’s government will respond if the flag carrier does, in fact, become insolvent. Permitting the carrier to collapse would threaten Budapest-Ferihegy Airport’s status as one of East/Central Europe’s largest hubs for air travel. Re-nationalization might be an option, but the country’s budget deficit would almost certainly make this difficult as well.
Canadian Hungarian Journal
Author: Christopher Adam
A Kanadai Magyar Hírlap alapítója és főszerkesztője. A montreáli Concordia Egyetemen diplomázott történelemből. Master of Arts fokú képzését a Carleton Egyetemen, PhD-jét az Ottawai Egyetemen szerezte, szintén történelemből. A KMH-n kívül a Hungarian Free Press című angol nyelvű lap főszerkesztője. 2015-ben Szabad Sajtó díjjal tüntették ki a Kanadai Magyar Hírlapot. A díjat Christopher Adam vette át Budapesten a Szabad Sajtó Alapítványtól.
10:24 de.
Keeping Malév alive is in our national interest and the socialists should act if it becomes clear that the airline is in trouble. But something tells me that they will just sit back and do nothing, allowing foreign carriers to dominate the Hungarian market.
11:33 de.
Azt kellett volna csinálni amit a Berlusconi tett az Alitaliával. Talán a Malévre is lehetett volna találni egy olyan konzorciumot, amely belföldi üzletemberekből áll és ezt pedig egy nagy külföldi partnerrel lehetett volna erősíteni. A Malév a oneworld szövetség tagja és így természetesen a British Airways lett volna a legjobb partner. De most már sajnos késő.
12:01 du.
I’ve got a quick question and I’m hoping that someone here might be able to answer it for me: If Malév does go bankrupt, will members of the Duna Club loyalty program lose all of their accumulated points? Is it possible that they might be able transfer them to another oneworld alliance airline? I’ve got quite a lot of air miles–-fingers crossed that Malév survives. I wouldn’t like to lose them.
12:32 de.
My understanding is that accumulated points can be used to redeem tickets on flights operated by any oneworld alliance airline, but they cannot be transferred directly from one account to another. I’m still positive about Malév. We should remember that the airline predicted a couple of weeks ago that it would break even next year. Let’s hope that this is accurate.
3:41 du.
It’s an interest question because I believe that the operating company (which is the one which would go bankrupt) is a separate entity from the one that holds the malev tradename and other rights such as membership of oneworld. If this is accurate, and the operating entity fails, and the entity that holds the tradename contracts with another entity to operate flights as Malev, then possibly you retain your points through all of this. A lot of ifs there though!
If I were you I’d go on a few holidays asap.
3:47 du.
Regarding Árpád’s comment, would the government (as he writes, the „socialists”) be able to intervene at all? Remember this is a private company, not a state company. Is it in the interest of the public finances – i.e. we the taxpayers – to financially support a private company owned by a Russian individual? Of course I know all the benefits to business of having malev flying between Budapest and many routes around Europe… but if there is a market there, other airlines will step in to fill the gap. Welcome to capitalism.
12:12 de.
Bobbygee, you’ve got a point. The European Union technically limits how far member states can go in bolstering failing airlines. But these rules are broken all the time–just look at the emergency loan that Alitalia received earlier this year. As for the Hungarian Socialist Party–it’s socialist only in name. They should consider Malév’s nationalization, if it looks as though it may go bankrupt. This way thousands of jobs can be saved and Budapest Ferihegy Airport would not experience a dramatic decline in passenger traffic, until a foreign carrier comes in and takes Malév’s place. Malév is a Hungarian national icon–it’s one of East/Central Europe’s oldest airlines and I would say that it deserves to be saved.