Hungarian flag carrier Malév has failed to attract any bids for its proposed partial privatisation. The airline has now switched its attention to finding an alliance partner.
Seven airlines expressed an interest in the 10% stake on offer, and Malév hoped that four of these would make a bid. Although Malév and its advisor, ING Barings, refused to name the bidding parties, press reports have picked out SAS, KLM, SAir Group and Air France as possible bidders.
Malév is in desperate need of a cash injection as it undergoes a fleet replacement programme which will see its remaining Russian-built aircraft replaced. The Hungarian privatisation and state holding company, APV, will now have to find the money from elsewhere.
John Marshall, director of ING Barings, says: "We found ourselves with what turned out to be a difficult sale." He notes the difficulty that virtually all carriers seeking private equity are having. "Malév was seen as nice but not a must have," he says.
He adds that Malév requires a lot of effort. "It is not just about finance. Carriers were worried about the amount of management resources that would have been required," he says. Some of the potential bidders are focussing on internal issues, he notes.
In contrast to Malév, CSA Czech Airlines has concentrated on attracting an alliance partner first, with the issue of equity left for a later date (around 2003). Having tried to do things the other way round, it seems that Malév is now set on this course as well. However, CSA's link up with SkyTeam, the most expansive global alliance, has given the Czech carrier exclusivity in this region.
Marshall says that some initiatives to improve the financial performance of Malév are underway, but that the failed privatisation process was a "distraction". The carrier hoped to resolve these issues with an alliance partner, but this task now falls to new chief executive Dr Erzsebet Antal.
Insiders say that Antal is much better placed than her predecessor, Ferenc Kovacs, to carry out the cut backs the carrier needs. Kovacs was seen as an expansionist, where as Malév needs to cut routes and staffing levels, they say.
Source: Airline Business
