Hungarian airline sale collapses

Malev's hopes now rest on joining a global alliance

Hungary's plans to sell the national flag carrier Malev nosedived on Monday as the state privatisation agency APV announced that all the potential bidders had withdrawn their interest.

Major European players including Air France, KLM, Lufthansa, Swissair and Scandinavian airline SAS had all reportedly considered buying the stake of up to 46.8% on offer.

But APV chief executive Gyula Gansperger said "exceptionally adverse conditions" in the international aviation industry had forced possible buyers to back out.

"The financial and market positions of the major airlines and the increased pressure from investors, as well as the large over-supply in the number of airlines offered for sale, have significantly dampened investor sentiment," he told a news conference.

An earlier confidentiality agreement had been signed by seven airlines of which four had showed "serious interest", he said.

Regional rivals

Industry sources said Malev's strategy was now likely to focus on joining a global alliance.

However, the airline had now been left some way behind regional rivals such as CSA of the Czech Republic and Poland's LOT, which had already linked with alliances, they said.

A previous partnership with Alitalia had collapsed several years ago.

Malev chief executive Erzebet Antal said the airline made a loss of "many billions of forints" in 2000, partly because of higher fuel costs.

One billion forints are worth about £2.4m or $3.6m.

Redundancies

Malev operates some 50-60 flights daily, flying to 35 countries and 45 cities.

It has a fleet of 27 planes, including 12 Boeing 737s and three Boeing 767s.

It has 4,300 employees and last year carried 2.2 million passengers.

Ms Antal said the airline now planned redundancies of 5-10% in 2001, including layoffs and outsourcing.