Malev Airlines Grounded
February 3rd, 2012
Below is a news story on the closure from the Irish Times and Reuters:
Hungarian flag-carrier Malev ceased operating early today after 66 years of almost continuous service, after its planes were held overseas for unpaid debts.
Prime minister Viktor Orban told Kossuth radio today that the decision to ground Malev was made after two aircraft were not allowed to take off from Dublin airport and Israel due to Malev's debts.
"It is painful ... We tried to keep Malev operational as long as possible, but we could no longer do it as we would have lost our aircrafts seized abroad ... We had to stop," Mr Orban said.
The airline operated a daily service between Budapest and Dublin six days a week. Passengers arriving this morning were checked into the flight before being told it would not take off, and they would have to rebook with other airlines.
Hungary's national airline had been placed
under extraordinary protection from creditors and a receiver was
appointed by the government earlier this week.
Malev said its suppliers had lost confidence and started to demand
advance payment for their services, while the government could no longer
provide cash injections for the company following a European Union
ruling last month.
"This has accelerated the outflow of cash to such an extent, that by
today the situation of the airline has become unsustainable," Malev said
in a statement.
"The board, in order to minimise losses, has ordered a halt in operation of the Hungarian national airline."
All flights were grounded from 5am.
The stoppage comes after the airline was ordered by the European
Commission last month to repay millions of dollars worth of state aid
received between 2007 and 2010.
Malev, which accounts for 40 per cent of annual turnover at Budapest's
international airport, has a leased fleet of 22 passenger aircraft.
After failed privatisation attempts, Hungary in 2010 bought back all but
a 5 per cent stake in the carrier, which employs around 2,600 people.
The government held a series of talks with Chinese carrier Hainan
Airlines last year on a cooperation deal, but they came to nothing.
In a January 9th ruling, the EU Commission listed various forms of state
financing for Malev between 2007 and 2010 that it said it would not
have been able to obtain from the market on the terms granted by the
Hungarian authorities.
EU competition regulators opened an in-depth investigation into Malev in December 2010.
The airline posted a loss of 24.6 billion Hungarian forints (€84
million) in 2010, but early this month forecast a significant
improvement in operating results this year on the back of higher revenue
and by filling more seats on its planes.
Mr Orban said despite
the stoppage he believed the country needed a national airline if it
could find investors willing to invest in it.
Source: Reuters via Irish Times.
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