Malev Re-Nationalized as Privatization Fails

Hungary will take a 95 percent stake in unprofitable national airline Malev Zrt. after the company’s latest privatization attempt failed.

The government will provide 25.2 billion forint ($127 million) to Malev, converting debt to stock and paying the balance in cash, the Finance Ministry said on its web site.

Hungary will replace Russian state-owned development bank Vnesheconombank as controlling shareholder. The bank has been in charge since last year after taking over a stake sold to Boris Abramovich’s AirBridge Zrt. in 2007 in the seventh attempt to unload Malev since communism collapsed in 1990.

The government will implement a “forceful restructuring plan,” including job cuts, in an attempt to return Malev to profit by 2012, the ministry said. Martin Gauss will remain as chief executive officer, it said.

Russia’s AirBridge will retain a 5 percent stake in Malev.

Source: Business Week