Malev on the brink as state bids to head off bankruptcy
Published 01/02/2012 | 05:00
Hungary is making preparations to assist passengers in case Malev, the country's unprofitable state-owned airline, stops operating, the development ministry said yesterday.
The government has reserved two billion forints (€6.8m) to help stranded travellers "in case it becomes inevitable" to ground Malev's aircraft, the ministry said.
The Hungarian cabinet is taking the measures to prepare for a "worst-case" scenario and to provide an additional safety net for passengers, after it designated the carrier as a company of strategic importance earlier this week, the ministry said.
Malev has said it doesn't have the financing to keep going as the government took preparatory steps to restructure the loss-making carrier and protect it from bankruptcy proceedings.
The announcement follows a European Commission ruling in January that forced the carrier to repay state aid worth hundreds of millions of euro received from 2007-10 -- the equivalent of its entire 2010 revenue.
After failed privatisation attempts, Hungary in 2010 bought back all but a 5pc stake in the carrier, which employs 2,600 people.
Earlier on Monday, a government decree, signed by Prime Minister Viktor Orban, designated Malev as a strategically important company, preventing creditors from launching bankruptcy proceedings. (Reuters)