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National Asset Management Terminates Remnant of Former Hungarian Airline Malév

Fanni Kaszás 2020.06.17.

Malév Ground Handling, the remnant of the former Hungarian airline, will ceases operations. The company ran out of money by June, became insolvent and therefore it will cease to exist, the owner told Hungarian news agency MTI. The airport service company, once owned by Malév, was last in the news in March, when many of their employees were fired due to a drop in business caused by the coronavirus epidemic. A competitor of the company, Budport, says Malév GH went bankrupt due to professionally questionable decisions of the management and the unfavorable service of Wizz Air. 

The owner, the Hungarian National Asset Management Inc. (MNV) said that Malév GH has struggled with fundamental financing problems since the liquidation of Malév back in 2012. They could not comply with the strong competition in the ground handling market of Liszt Ferenc International Airport, which greatly contributed to the company’s loss in operation and difficult liquidity situation. Since 2012, several state companies have been able to finance Malév GH. The state has now revealed that in addition to MNV, Tiszavíz and the Hungarian Development Bank have also supported the company’s operation with a number of measures.

Although Malév GH managed to achieve a modest profit in 2018 as a result of the reorganization that started in 2017, it wasn’t enough to be able to recoup the significant loss accumulated in previous years. Finally, Malév GH found itself in a critical economic situation due to the current paralysis of air transport worldwide, which became insolvent by June.

Back in March, when Malév GH let go of many of their employees, CEO Tamás Sápi said that about 430 people worked for the company. From April on, a significant proportion of the workers involved in the service activity were exempt from working because there were essentially no flights in the country that could be served due to the coronavirus pandemic. In addition, according to its latest report from 2018, Malév GH closed with a loss of 108 million.

Although previous state benefits helped the company keep going, it is no longer able to receive additional funds, as it would be prohibited state aid in the EU. Three years ago, a direct competitor of Malév GH, Budport, complained that the various state aids, debt reliefs, and loans that the company received were incompatible with EU rules on fair competition. Last autumn, the EU also launched a formal investigation into the state aid granted to Malév GH.

After MNV also included in its statement of reasons for the termination of Malév GH that they could no longer provide another ad hoc state fund for the company due to Budport’s complaint, the competitor responded in a statement to the claims. According to Budport, they did not act to make the existence of Malév GH impossible, but for fair competition. Malév GH received, among other things, HUF 4.5 billion in state aid, which even exceeded its sales revenue.

However, according to Budport, the professionally-weak management of Malév GH and MNV, which otherwise proposed a bad restructuring plan and also deceived the state decision-makers, could not cope with the opportunity. In addition, a large part of the state aid ended up with Wizz Air, the largest customer of Malév GH. According to the statement, the company otherwise also served WizzAir “the de facto national airline” on such unfavorable terms for Malév GH, which would have made it impossible to carry out the reorganization anyway.

Andrea Bártfai-Mager, the Minister responsible for the management of national assets, is arranging the liquidation of Malév GH Zrt. through the MNV.

featured photo: Malév Ground Handling’s Facebook page