Peter Bennett
The Hungarian privatisation agency, APV, means to privatise its flag carrier Malev by 2000 but a strategic foreign partner is not yet in sight.
Malev's sell-off is set to be a complicated one with a 40 per cent state-owned stake floated in an initial public offering and a strategic buyer sought for the 35 per cent stake bought last December by Hungarian bank consortium, Air Invest. Malev's remaining 25 per cent will remain in state hands. The carrier's privatisation will be further complicated by the need to keep 50 per cent of its shares in Hungarian hands.
Malev's new privatisation timetable comes after several postponements and a disastrous five-year partnership with Italian carrier Alitalia. In December, Alitalia was forced to sell its 30 per cent stake to the Air Invest bank consortium after the European Commission made the divestiture a condition of Alitalia's US$1.6 billion state aid handout. Italian investment group Simest also sold its 5 per cent stake to the consortium.
APV deputy managing director Bela Szabo says the Malev sale will only be finalised when the airline is restructured - and that means modernisation of its fleet and a lowering of costs. 'But it is built into the plan that if we get a good offer from a strategic buyer we can take it,' he adds. Szabo admits that the APV was in talks with several potential partners in 1997, including Canadian, Delta and KLM, but that these came to nothing.
Both the APV and Malev say a link-up with a western carrier is essential for the future of the airline and the Air Invest purchase now opens the door for it to take its time in finding a suitable partner. But any such talks are unlikely to start soon. The APV says it is not currently talking to anyone, while Air Invest will want to see some return on its stake. And the announcement that the Hungarian government is to allow pensioners free air travel is unlikely to help.
Air Invest says it is strictly a financial partner and will seek no role in the running of the airline while one member of the consortium, OTP, insists that it is not a condition of the purchase that it must sell out to a strategic foreign airline before the full privatisation is complete. But with the government saying 50 per cent must stay in national hands - and the APV wanting to issue an IPO on the Budapest exchange - it looks like the Air Invest stake will be the one up for grabs.
Malev chief executive Sandor Szathmary stresses that the airline is now gearing up for privatisation and is in need of a foreign partner. Malev is now in a period of transition, and 'we have to change our attitudes to answer the market challenges', he says. Malev has already developed Budapest as a hub, helping to address these challenges, which has 'proved to be a good move,' he says.
Source: Airline Business
