Malév puts brave face on global crisis

Malév Hungarian Airlines is set to sign an agreement with a major airline that will take it into a global alliance "within weeks", József Váradi, the airline’s chief executive told foreign journalists last week.

Váradi declined to give details, except to say the link-up was purely commercial and would not involve any change of ownership at this stage. Alitalia, which formerly owned 30% of Malév, was not involved in the deal, he said.

Váradi, who joined Malév from the private sector this year, also played down the impact of the current airline industry crisis on the Hungarian carrier and was upbeat on longer term prospects.

Although business on its New York flights was significantly down in the aftermath of the September 11 terrorist attacks, Malév was not heavily involved in traffic on the North Atlantic route and overall passenger figures were only 4-5% down, he said.

Nonetheless, the additional pressure to cut costs meant the airline would seek to renegotiate its aircraft leasing agreements, plus bring forward and expand staff cuts in an effort to limit this year’s loss to the projected Ft5.6 billion ($20 million).

Váradi hoped that by shedding up to 27% of its 4,000 strong work force (including subsidiaries) by the end of this year, the carrier would break-even in 2002.

As part of its restructuring plans, he said the carrier would become "more efficient and customer orientated," enabling it to double the current annual figure of 4.5 million passengers within five years.

To achieve this, Malév aimed to develop Budapest as a hub for the region, targeting numerous secondary towns in neighboring countries such as Romania, Slovakia, northern Italy and even southern Germany, Váradi said. But launching such services required small planes, especially in the first weeks.

"We don’t have enough of these. This is currently my biggest headache," Váradi said, adding that he was now seeking to out source these services in the start-up phase to small, private Hungarian carriers.

But while airline analysts agreed Malév might be doing well in terms of holding up its passenger figures in the world wide downturn, they stressed the difficulties in developing Budapest as a regional hub, especially since Vienna and Munich already provided similar services nearby.

"In airline terms, they are just down the road, and they have a thriving home base.

"There are potential niche markets out there, so you can’t rule it out, but you’d have to persuade me of it completely," said one UK-based airline consultant.

And while Váradi was painting his upbeat picture, ÁPV, the airline’s owner was simultaneously releasing contradictory news concerning the first half performance, when losses soared to Ft8 billion ($28.3 million), compared to Ft9.4 billion ($33.2 million) deficit for the year 2000.

l The current downturn in the airline business may mean delaying plans for a third terminal at Ferihegy, according to Gábor Somogyi-Tóth, acting director of LRI, the air traffic and airport administration authority.

Traffic through Ferihegy this year could top five million passengers for the first time, not far short of the 5.5 million total capacity provided by existing terminals.

Although only at the planning stage, Ferihegy terminal 2C would have a capacity of five million passengers, almost doubling the total airport capacity to 10.5 million.

The new terminal, costing around $200 million, would serve Malév and its alliance partner, Somogyi-Tóth said

Longer term, LRI has plans to build yet another terminal, probably sited on the Budapest side of the airport, which would take the total capacity at Ferihegy to 15 million passengers.

Budapest Sun