Earlier this week, news out of Hungary regarding its flag carrier Malev was not encouraging. Indebted approximately $440 million dollars, it is being investigated by the European Commission to determine whether or not the carrier is in compliance with regulations as they apply to substantial loans taken between 2007-2010.
In its response, Hungary’s Ministry of National Development indicated that it is looking for strategic partners to help rescue the airline or to form plans to create a new carrier. The Ministry also cited the vital need to maintain a national carrier for the sake of its economy as motivation to find resolution to Malev’s woes.
The Ministry had indicated that it has been in talks this year with China’s Hainan Airlines and European Airline operators, but not arrangements have been reached.
The Commision’s Report was critical of Malev’s management suggesting that there is no long term plan for the execution of Malev’s business model. It also went on to suggest that many people assigned to be managers within Malev have little to no airline industry experience and are not in a position to lead the airline effectively. It also referred to the airline as being owned in a manner where the owners do not have any of their own capital exposed to Malev thanks to the sales arrangement made during privatisation.
With cancelations of Malev’s long haul flights and attempts to sell part of regional fleet, it seems to me that Malev will indeed need assistance if it is going to reorganize and continue to exist as Hungary’s Flag Carrier. Malev is a member of the OneWorld Airline Alliance.