Hungary govt to sell off national airline Malev

The State Privatisation Agency APV will offer its full 99.95 percent stake in Malev for sale, Zoltan Gal told a news conference after the weekly cabinet meeting, without disclosing the expected price.

The government wants to close the deal this year, he said, adding that talks were already under way with potential bidders.

However, Gal declined to comment on press reports that China's Hainan Airlines <900945.SS> would be among the potential bidders.

Gal said a buyer, either a single company or a consortium, would have to increase Malev's capital and guarantee the repayment of Malev's debts, which add up to 36.2 billion forints ($176.1 million). Most of that debt, 33 billion forints, is currently guaranteed by the state.

The tender is part of the government's efforts to complete the privatisation of state-owned companies and stem losses on state assets. It recently announced the sale of loss-making state-owned farming company Babolna and other firms.

"The government will not allow the losses on state assets to be financed by taxpayers," Gal said, adding that the competition rules of the European Union, which Hungary joined in May, left little room for subsidies to state-owned firms.

Malev still has a good chance of receiving 3 billion forints ($12.6 million) in subsidies in October, withheld by the government earlier this year, Gal said.

Malev has lifted first-half sales by 15 percent and the number of its passengers by 25 percent, while a pick-up in international air traffic offers a better environment for privatisation than in 2001, when a sell-off attempt failed, the spokesman added.

"Based on talks, there is a chance of finding an investor who -- retaining the national airline's status (a requirement by bidders) -- will be able to ensure Malev's competitiveness," he said

Gal said Malev could also join an international alliance later this year. Malev said earlier that it could join the Air France-led SkyTeam alliance in November.

Source: Reuters