Malév Grounded

Hungarian flag-carrier Malév, which accounts for 40% of Budapest Airport's turnover, grounded its flights at 0500GMT on February 3. (Key: Caroline Cook)

Hungarian flag carrier Malév grounded its fleet at 0500GMT on February 3 after 66 years of almost continuous service.

Despite being placed under creditor protection the day before, the 95%-government-owned airline decided to cease operations after two aircraft were held in Tel Aviv and Ireland over unpaid debts.

Malév CEO Loránt Limburger said in a statement that the airline’s suppliers had lost confidence and begun demanding advance payments, adding that: “The situation has become unsustainable.”  The Hungarian government could no longer provide cash injections to help the airline, following a European Commission ruling on January 9 that state aid given to Malév between 2007 and 2010 was unlawful.  The 38 billion forints (US$171.5 million) that the airline was ordered to pay back was equivalent to its revenue in 2010.

The carrier, part of the oneworld alliance, had a leased fleet of 22 aircraft and accounted for 40% of the turnover of Budapest Airport, which is owned by German company Hochtief and four financial partners.  Malév employs 2,600 staff and reported a loss of 24.6bn forints ($110.8m) in 2010, although earlier this month a significant improvement on these results had been predicted.

Cooperation talks had been held with Chinese Hainan Airlines last year, but to no avail.

However, Irish low-cost carrier Ryanair has announced a “rescue plan for Budapest and Hungarian tourism.”  It will create a base at Budapest Airport with four new Boeing 787-800 aircraft by February 17 and will operate 31 new routes to replace most of those lost through Malév’s grounding.  A statement from Ryanair says it will offer lower fares than any other airline and aims to handle up to two million passengers a year from the base.  International Airport Council figures have said that the move could save up to 2,000 Hungarian jobs.