The European Commission yesterday ordered Malév to repay almost Ft 100 billion to the state, after ruling that government financial assistance for the airline during 2007-10 constituted illegal state aid.
In essence, the EU competition authority found that Malév could not have obtained such financing from the market on similar conditions as offered by the state.
The measures in question were the state takeover of a €76 million loan in December 2007, the Ft 4.3 billion cash loan issued when the sale of Malév Ground Handling failed, the postponement of Ft 13.8 billion in social contribution payments, the Ft 25.4 billion capital increase in February 2010, a further Ft 5.7 billion capital increase in September 2010, the Ft 14.9 billion in state loans provided between May and September 2010 and the exchange of part of these loans for Malév shares in September 2010.
The Development Ministry announced that it understands and respects the ruling. The ministry has developed different responses and will apply the most suitable one after studying details of the ruling.
The cabinet is expected to address the question at its meeting on January 16.
Maintenance of a state airline remains a top priority of national interest, the ministry underlined, adding that the continuous operation of Malév is essential to this goal.
The ruling does not create an immediate payment duty for Malév, nor does it specify the amount to repaid, leaving that calculation to the state.
The government has four months to find a solution, as EU law allows 60 days for the state to define the exact sum to be paid by Malév and its sources.
The procedure was launched based on objections filed by Wizz Air.
An amendment to the bankruptcy law made in last summer allows a non-standard bankruptcy procedure to be applied if Malév is classified as a company of strategic state interest.
In such a process state-owned Hitelintézeti Felszámoló can sell assets without public announcements. No legal challenges would be possible concerning the method and valuation of the sales, Napi Gazdaság points out.
> An amendment to the bankruptcy law made in last summer allows a non-standard bankruptcy procedure to be applied if Malév is classified as a company of strategic state interest.
> In such a process state-owned Hitelintézeti Felszámoló can sell assets without public announcements. No legal challenges would be possible concerning the method and valuation of the sales, Napi Gazdaság points out.
Now call me cynical, but doesn’t this mean, sell off the profitable assets to friends of the government, and let the rest collapse?
@ UnLeto….You could probably be arrested by the thought police for that. Equally, you are probably also right. This country is rotten to the core.
Why won’t it be possible to make Malev state-owned and not private, but subsidized by the state? In this case financial investment into this company will not be classified as unfair help which interferes with healthy competition on the market. As far as I know there is no law which prohibits state to own the “company”, in this case it could be called a “public service”…
Why should the State own an airline? There is no compelling economic argument. All the arguments come down to Hungarian nationalism or “I am the government and I want to pillage a company and get kickbacks”.
One of the reason that the Czechs have done better than the Hungarians is that they embraced capitalism together with a responsible social democracy.
Eldar i think you are High
The Hungarian govt were pumping money into loans to Malev late last year. Won’t ever see that cash again.
There is really no reason Malev should not succeed as an airline.
Problem is, they never got rid of the bloated bureaucracy that runs the place. Cut the crap out of the company. Build strategic relationships that can take advantage of Budapest’s central location in Europe. Budapest should be the logistics capital of Eastern Europe.
Malev could be a healthy airline.
(Oh wait, I forgot, it’s more important to argue about nationalism and religion and every other meaningless crap than solve real problems or create real companies).