"Russia's Vnesheconombank (VEB) is to carry out a EUR 10 million capital increase at Hungarian airline Malév. The troubled carrier is to prepare a three-year business plan with the aim to make it profitable again.The Malév Board of Directors has approved this year's budget for the airline. The management refused to elaborate, saying employees need to be informed first about the concrete plans.
Chief Executive Martin Gauss said it's best if the staff does not learn about the figures from the press. He noted that there would certainly be layoffs, but nothing dramatic. “It (the extent of layoffs) will be adjusted to market conditions," he said. Malév currently employs more than 3,000 people, but if current market conditions determine how drastically staff will be cut, the employees have every right to be concerned.)
“We have revised the business plan of 2009 and we support it. The plan includes important steps to offset the crisis that are sufficient to bring the airline into a stable operational position. We also confirmed that we want to keep Malév as a national Hungarian flag carrier,"said Chairman Anatoly Ballo in a statement on Tuesday.
Vnesheconombank is to carry out a EUR 10 million capital increase at the carrier, possibly by the end of May, he told a press conference.
“The Board requested the management to prepare a three-year business plan to enable Malév's positive financial performance," he added.
The capital hike is to be executed by AirBridge Zrt., owned 51% by Magdolna Költő and 49% by the Russian bank. Költő told local newswire MTI that the action would not change the carrier's ownership structure and VEB would use a loan for the transaction.
Last month VEB provided a EUR 20 million loan facility to Malév, which made it possible to continue the regional fleet transformation programme.
Ballo was asked several times whether they have already transferred the EUR 32 m bank guarantee drawn by the Hungarian state and whether penalty will be paid for the default in payment. His only reply was that “some money will be transferred within a certain time", local daily Népszabadság reported.
He added that VEB is ready to continue financing Malév. (In March it carried out a HUF 3 bn capital increase, which largely equals EUR 10 m at the EUR/HUF exchange rate at that time.)"
Source: Portfolio Online Financial Journal
28.05.2009