krisyyz
Topic Author
Posts: 1266
Joined: Thu Nov 25, 2004 11:04 pm

Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 1:26 pm

Malev may be on its last legs as the National carrier of Hungary may be required to pay back all government loans. Hungarian Government is currently in talks with investors regarding a new national carrier if Malev goes bust.

Great article from Fligthglobal about what went wrong at Malev.

http://www.flightglobal.com/news/art...r-failures-to-manage-malev-365644/

"It claims the buyer practically did not invest any capital of its own, and that Malev effectively "purchased itself under a Russian umbrella". The ministry is damning about the course taken to privatise Malev, and the "drastic deterioration and destruction" of the company's business under private ownership, while the decision to renationalise the carrier - to avoid the "inconvenience" of liquidation - has placed a heavy burden on the country's budget."

http://atwonline.com/airline-finance...orts-malev-nearing-bankruptcy-1206

"Malev Hungarian Airlines (MA) could face bankruptcy in the coming weeks, the Hungarian daily Vilaggazdasag reported Tuesday.

Hungarian Minister of Finance Tamas Fellegi confirmed to Hungarian media that the Budapest government is holding talks with an investor from the Czech Republic to form a new carrier and a deal could be reached by the middle of next year. The investor is also owner of Czech leisure carrier Travel Service."


A very sad state of affairs! I personally see very little hope that this 64 year old company can survive this latest round of setbacks.

KrisYYZ
 
pnd100
Posts: 198
Joined: Wed Mar 18, 2009 4:40 pm

RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 1:44 pm

This is bad news for Hungary & MA. I sure hope they can find a way out.

Oneworld has had it tough recently;
MX is no more. AA, JL & QF all have had significant financial difficulty. Even potential member IT is on shaky ground!

With MA being a smaller operation is there any prospect of a fellow alliance member like CX or IAG offering assistance?
 
kl911
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 1:55 pm

Yes, I have read it in the papers. I personally wouldnt mind a new leaner company replacing Malev a la Brussels Airlines replacing Sabena.

Or even better, Wizzair drastically expanding its Budapest Base.
 
babybus
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 2:28 pm

Quoting krisyyz (Thread starter):
"It claims the buyer practically did not invest any capital of its own, and that Malev effectively "purchased itself under a Russian umbrella".

So no one is going to lose any money. How clever.

Although I'm a great fan of national airlines if it isn't cutting the mustard it has to go. Maybe LCC Wizz would be a more suitable airline for Hungary's needs?
and with that..cabin crew, seats for landing please.
 
anstar
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 2:37 pm

Quoting pnd100 (Reply 1):
MX is no more. AA, JL & QF all have had significant financial difficulty. Even potential member IT is on shaky ground!

Add BA to that list as well. Id say QF is still ok - They havent made a loss unlike the others.
 
B747forever
Posts: 12855
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 2:42 pm

Quoting anstar (Reply 4):
Add BA to that list as well.

I thought they were doing alright.
Work Hard, Fly Right
 
LHRFlyer
Posts: 687
Joined: Sun Apr 11, 2010 12:50 pm

RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 2:45 pm

Quoting anstar (Reply 4):
Add BA to that list as well

On what basis? It is now owned by IAG and IAG expects to double last year's (proforma) operating profit.
 
JU068
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 2:46 pm

The biggest mistake was done by their incompetent ex-CEO Gauss! Unfortunately he is 'running' airBaltic at the moment.

In the end the government will not allow Malev to go bankrupt, they will probably keep on giving it money and then when they are fed up they will just write off its debt and create a new airline.
No one is interested in buying them and Hungary will surely not allow Wizz Air to be its national carrier.
 
PEET7G
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 3:01 pm

Poor MALEV is the perfect example of how ignorant politicians and greedy investors rape companies and run them into the ground without proper control here in the CEE. My biggest problem is that even the current "investigation" into the mishandling of MA assets, as well as all the new plans for setting up something new with some new (and again questionable) investors is just an other attempt (but this time by new greedy politicians) to feast on the leftovers of aviation in this country  
Quoting pnd100 (Reply 1):
With MA being a smaller operation is there any prospect of a fellow alliance member like CX or IAG offering assistance?

The biggest problem with MA "for sale" is a huge debt that comes with it. Unfortunately everyone is interested in the MA network, and the market they can tap, but no one with sense is willing to take on the huge debt that comes with it  
The most logical taker would have been IAG, but it is totally understandable that they will never want such a financial disaster...maybe a reborn MA, but not this one.

Quoting kl911 (Reply 2):
I personally wouldnt mind a new leaner company replacing Malev a la Brussels Airlines replacing Sabena.

Without a miracle, I think that would be the only way out...

Quoting kl911 (Reply 2):
Or even better, Wizzair drastically expanding its Budapest Base.

Oh, please...no, never...  
Peet7G
 
JL418
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 3:49 pm

Quoting anstar (Reply 4):
Add BA to that list as well.

Despite the government attempts at crippling the UK airline industry BA isn't doing bad at all.

On another note, I'm really sad at seeing MA in dire waters. I truly love that airline and I think they have the best short haul Business class hard product in Europe right here, right now. I'm due to fly them next week and I dearly hope they'll keep on delivering the great service they've been giving us so far.
 
anstar
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Joined: Sun Nov 23, 2003 3:49 am

RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 4:06 pm

Quoting B747forever (Reply 5):
I thought they were doing alright.

Wasnt it last year they announced huge losses?

I Added BA to the list as if you are going to add QF who havent lost a dime in the past 10 years then you should add BA who have lost a fair amount in the reporting season before last.
 
LHRFlyer
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Joined: Sun Apr 11, 2010 12:50 pm

RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 4:28 pm

Quoting anstar (Reply 10):
Wasnt it last year they announced huge losses?

No. It was profitable in the 9 months to the period 31 December 2010 (it changed its year end from March to December following the merger).
 
pnd100
Posts: 198
Joined: Wed Mar 18, 2009 4:40 pm

RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 4:32 pm

Quoting anstar (Reply 10):
I Added BA to the list as if you are going to add QF who havent lost a dime in the past 10 years then you should add BA who have lost a fair amount in the reporting season before last.

It is my fault, I should clarify. While in the year ends QF has done alright, it was included in my list because of the recent trouble it has had with respect to labour issues, fleet grounding & network uncertainty. This has caused QF shares to have fallen 28 per cent in the last six months. That is why I included as having significant financial difficulty.

In no way did I intend to hijack the thread. This is about MA & we should stick to that. It saddens me that MA is in this condition. Heck, I still miss them at YYZ! The 767 in MALEV colours was one of those beautiful sights

[Edited 2011-12-07 08:34:10]
 
crAAzy
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 9:44 pm

Quoting PEET7G (Reply 8):
The most logical taker would have been IAG, but it is totally understandable that they will never want such a financial disaster...maybe a reborn MA, but not this one.

I think with AB (BER/VIE) entering OW in 2012 IAG would likely not buy MA, nor would the pursue any airline out of BUD.
 
Independence76
Posts: 398
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 10:58 pm

Only a matter of time before Oneworld becomes Underworld....  

Really hope we see some changes for the better very soon.

[Edited 2011-12-07 14:59:02]
 
Akiestar
Posts: 812
Joined: Wed May 06, 2009 6:51 am

RE: Malev Nearing Bankruptcy, Privatization Disaster

Wed Dec 07, 2011 11:48 pm

Wow. Reading this story is very surprising for me since I just got my Duna Club card in the mail this morning (and I'm hoping to status-match in the next few weeks).   

I could have never thought MA had so many problems with its finances, especially since having flown them recently, it didn't seem apparent at all. Hopefully it can bring its books to order so we can have a leaner, healthier airline.

Quoting Independence76 (Reply 14):
Underworld....

Coincidentally, Hungary has a lot to do with the Underworld movie trilogy. xD

[Edited 2011-12-07 16:42:20]
 
ljupco
Posts: 31
Joined: Fri Feb 19, 2010 11:03 am

RE: Malev Nearing Bankruptcy, Privatization Disaster

Thu Dec 08, 2011 1:05 am

Very sad for MA. It seemed they are going forward acquiring more and more from the regions market. Adria is also in troubles, JAT is at its edge, MAT went in history, Bosnian flag carrier B&H Airlines are very small, Olympic Airlines are also history, only Croatia Airways as a Star member seems to do some work fine. As it is going now, and if this trend keeps its rate, Balkans countries will appear without a flag carrier and major airline.
LCC like Wizz, EasyJet and many other regional LCCs took a lot of pax on the European routes which were the major money makers for the national Balkans flag carriers. A pressure like that the senior management should've been able to handle, but unfortunately, they just lay on connecting flights and feeding its partners from alliances.
It is very disappointing to hear the news for such an airlines with a tradition and history behind them. I hope the crises will not strike again and things would move forward in a positive sense.
 
XA744
Posts: 630
Joined: Sat Mar 13, 2004 11:40 am

RE: Malev Nearing Bankruptcy, Privatization Disaster

Thu Dec 08, 2011 1:07 am

Quoting PEET7G (Reply 8):
Poor MALEV is the perfect example of how ignorant politicians and greedy investors rape companies and run them into the ground without proper control here in the CEE

A true pity, really. Something very similar is what happened to Mexicana Airlines, which will never fly again, and is about to be officially declared bankrupt.

Two iconic symbols in the world´s aviation industry are about to become a thing of the past. Nevertheless, I hope a last minute solution could be found and MA is saved...   

Best regards
No matter how you fly...just never get your wings clipped !
 
soyuz
Posts: 34
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Thu Dec 08, 2011 1:39 am

Hmmm, shonky directors with no experience of aviation business management appointed thanks to their political allegiances, sale of LHR slots, sale of the long-haul fleet, sale of almost every asset apart from a few aircraft..... smells a lot like CSA. There is a very bad stench in the Eastern European air. And it is the stench of torsos of once very capable legacy carriers like OK and MA slowly rotting away in a swampland of debt thanks to years of poor management. I really hope that somehow these airlines will make it through these tough times, but my optimism is slowly fading....
 
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PA110
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Thu Dec 08, 2011 2:23 am

It seems cruel to say, but the writing has been on the wall for years now. It is simply no longer economically viable for every country to have its own national flag carrier for no reason other than national prestige. Large alliances and regional LCCs are slowly putting an irrevocable end to the days of national flag carriers for every single nation.
It's been swell, but the swelling has gone down.
 
krisyyz
Topic Author
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Thu Dec 08, 2011 2:27 am

A large portion of my family in Hungary worked for Malev in one way or another. They are very saddened by this news but they definitely saw the writing on the wall for the last few years. The story of Malev is one of failure to face reality and putting national pride ahead of good business principles. The constant interference by the Hungarian government, appointing unqualified CEO's, mandating network expansion and pushing privatization has completely cut MA off at the knees.

Malev was one of the 1st eastern-bloc airlines to order/lease Boeing aircraft to replace their Russian aircraft. They were the second Eastern European airlines (I think) to start long-haul ops with Western aircraft to N.America and Asia. I think they still have an active LOI for the SSJ , but I doubt they will be delivered.

I truly hope that someone jumps in at the last second and saves Malev's identity. But I fear the last chapter of this long-serving airline will be one of complete liquidation. Does Hungary really need a full service airline ? Well that is up for debate. I know BUD 's expansion was partly planned on MA starting more flights in Eastern Europe and Asia, so MA's demise may also affect plans at BUD.

Let's see what happens.

KrisYYZ
 
MaverickM11
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Thu Dec 08, 2011 2:38 am

Did the Seabury overhaul accomplish anything or were the changes overturned by the government?

Quoting soyuz (Reply 18):
And it is the stench of torsos of once very capable legacy carriers like OK and MA

But were they really ever "capable" to begin with?
E pur si muove -Galileo
 
JU068
Posts: 2094
Joined: Thu Aug 20, 2009 8:23 am

RE: Malev Nearing Bankruptcy, Privatization Disaster

Thu Dec 08, 2011 7:01 am

Quoting PEET7G (Reply 8):
Oh, please...no, never...

Amen. I do not understand how some people in the wider Balkan region keep on advocating against their national carriers who have been around for decades and which promote the country much better than airlines such as Wizz Air. Not to mention that out of the top 10 oldest airlines in Europe most of them are from Eastern Europe. It would be a shame for an airline like Malev to dissappear.

All they need to do is rebrand and voila.

Quoting ljupco (Reply 16):
JAT is at its edge

JAT is not on the edge, it was closed down in 2003 when it became Jat Airways. JU's problem is NOT making money but rather keeping its managment from stealing it all away. If you look at Jat's economic performance, the vast majority of routes are making money.
Their summer schedule is out and it seems to me that they will be getting a new aircraft for the amount of new frequencies, such as daily flight to Athens, additional flights to TLV, LCA and return to DXB and the rumoured launch of flights to LED. Not to mention that they will be flying to Pula, Zadar and Dubrovnik in Croatia.

Quoting ljupco (Reply 16):
Olympic Airlines are also history

Yes it is gone but it was replaced by Olympic Air which is a very well run airline with great crew and impecable service.

Quoting ljupco (Reply 16):
Croatia Airways as a Star member seems to do some work fine

Huh? Croatia Airlines is not doing fine. Just recently they faced strikes from pilots and cabin crew over low pay, not to mention that pilots might strike again after the 3 hour rule was introduced.
Main difference between Jat Airways and Croatia Airlines is that JU operates, just like Malev, from a very centralized country with the only airport being in Belgrade. Croatia Airlines has a market similar to that of Turkey or Greece where it has to expand from the coastal cities as well, meaning it has a greater problem with seasonality.

Quoting PA110 (Reply 19):
It seems cruel to say, but the writing has been on the wall for years now. It is simply no longer economically viable for every country to have its own national flag carrier for no reason other than national prestige. Large alliances and regional LCCs are slowly putting an irrevocable end to the days of national flag carriers for every single nation.

I have to dissagree with you here. The time when each country aspired to have direct flights to North America is gone just like the time when countries had disfunctional airlines which were subsidized by their national governments.
Problem which is predominantly present in Eastern Europe is that airlines have not reorganized themselves from the times of Communism and as such could not compete effectively.
Just look at Tarom, it is a perfect example of an airline that was forced to reorganize due to massive lowcost presence in the country. Naturally it is not making crazy cash but it is sure giving a decent alternative to those who do not want to fly on Blueair or Wizz Air out of Bucharest.
 
Burkhard
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Thu Dec 08, 2011 7:21 am

These people still do live on another planet. A tiny province like Hungary cannot support a stand alone airline. There is no future for airlines smaller than 200 planes, maybe even 500 planes. Putting tax money into anything smaller than that is a waste.
 
JU068
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RE: Malev Nearing Bankruptcy, Privatization Disaster

Thu Dec 08, 2011 7:31 am

Quoting Burkhard (Reply 23):
A tiny province like Hungary

Last time I checked the EU constitution failed meaning that Hungary remained a fully independent state and not a ''province'' of any sort.
Not to mention that Hungary ranks as the 13th most populous state in the EU ahead of Sweden, Austria, Denmark, Finland and Ireland, in addition to having a considerable diaspora both in Europe and North America.
 
777klm
Posts: 482
Joined: Sun Apr 24, 2005 12:23 am

RE: Malev Nearing Bankruptcy, Privatization Disaster

Thu Dec 08, 2011 8:15 am

Quoting ju068 (Reply 24):
Last time I checked the EU constitution failed meaning that Hungary remained a fully independent state and not a ''province'' of any sort.

Hello?! sarcasm!

Quoting Burkhard (Reply 23):
There is no future for airlines smaller than 200 planes, maybe even 500 planes. Putting tax money into anything smaller than that is a waste.

I do not agree. I think there is a future for airlines smaller than 200 planes.
Smaller airlines should develop a product that is unique to other airlines.
Like Finnair, who puts itself on the map as airline from Europe to Asia and vice versa
MA could have done something similar, but focus on eastern europe instead, including the northern part of eastern europe.
Next flight: AMS - BCN - EZE
 
pnd100
Posts: 198
Joined: Wed Mar 18, 2009 4:40 pm

RE: Malev Nearing Bankruptcy, Privatization Disaster

Thu Dec 08, 2011 1:39 pm

Quoting Burkhard (Reply 23):
There is no future for airlines smaller than 200 planes, maybe even 500 planes.

With due respect, I'm not sure about this statement. There are many successful airlines worldwide with a lot fewer than 200 planes. Only 8 airline groups have about 500 planes or more. Among them AA, DL & UA have all declared bankruptcy at one point or another. Size does not guarantee success.

Quoting Burkhard (Reply 23):
A tiny province like Hungary cannot support a stand alone airline.

Hungary has a population greater than the UAE & Qatar combined & those Gulf States may have oil but they lack the geographic & diaspora advantages that Hungary has. Hungary may not be a large country but if managed properly, it can easily support a stand alone airline. Size alone is not a critical factor in my humble opinion