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European Commission orders Hungary to recover incompatible state aid from Malév

9-Jan-2012 6:16 PM

European Commission ordered (09-Jan-2012) Hungary "to recover incompatible state aid from national air carrier Malév" after finding that "financing granted to Hungarian flag carrier Malév between 2007 and 2010 in the context of its privatisation and renationalisation constitutes illegal state aid, as Malév would not have been able to obtain similar financing from the market on the terms conceded by the Hungarian authorities". The Commission's investigation concluded Malév, given its consistently difficult financial situation, would have been unable to secure such financing on the market on the terms conceded by Hungary nor possibly any financing at all. Malev responded to the decision, stating it "does not mean that Malév faces an immediate payment liability" and the decision "does not affect the daily functioning of Malev". European Low Fares Airline Association (ELFAA) welcomed the decision by the EC. [more - original PR - European Commission] [more - original PR - Malev] [more - original PR - ELFAA]

Malev: "The EU ruling does not affect the daily functioning of Malév, its flights continue to operate according to schedule, the company continues to pay its suppliers in compliance with contractual conditions and it provides normal services to its partners...The Hungarian government has informed Malév management and the general public that it remains committed to maintaining the national carrier....Malév has forecast significantly improved operational results in 2012, justification for which is based on the financial results posted in the last quarter of 2011. The airline is showing outstanding performance indicators even when compared with its competitors: it achieved a load factor of 78% in the final month of last year, and in Q4 2011 it boosted revenue by HUF 7 billion compared with the same period of 2010." Company statement, 09-Jan-2012.

European Commission: "Malév could not demonstrate how it would become viable again under its current business model. Malév's business plan contained no evidence that a private source would be contributing to the cost of restructuring and the plan contained no compensatory measures to minimise the competition distortions brought about by the significant state support. Moreover, Malév had already repeatedly received state support over the last few years," Company statement, 09-Jan-2012.