The government has decided to initiate liquidation proceedings regarding the economic, financial and liquidity difficulties of MALÉV Ground Handling Ltd. The Hungarian Airline company became insolvent due to the coronavirus pandemic, and in March, the majority of the approximately 430 employees were fired. From April, a significant proportion of the workers involved in the service activity were exempted from working because nearly all flights were suspended.
MALÉV GH Ltd., which earlier provided ground handling services to MALÉV, has been struggling with fundamental financing problems since its liquidation in 2012, wrote the Hungarian National Asset Management Company (HNAM), the current owner of MALÉV GH.
The intense competition in the ground handling market of Budapest Ferenc Liszt International Airport significantly contributed to the fact that the company has been operating at a loss. A new Hungarian airline company under the name of Veritas should have been launched before the bankruptcy of MALÉV. However, state investors intentionally delayed the start while the government still founded the airline company, Index reported.
Although MALÉV GH managed to make a modest profit in 2018 as a result of previous reorganisations, it was not able to compensate for the significant loss accumulated during the earlier years. Finally, the economic situation of MALÉV GH became critical due to the coronavirus crisis and the flight suspensions; the company became insolvent by June.
The state has now revealed that in addition to the Hungarian National Asset Management Company, Tiszavíz and the Hungarian Development Bank have granted a series of financing measures in favour of the MALÉV GH since 2012.
In 2017, Budport, a competitor of Malév GH, made a formal complaint to the European Commission alleging that the state support for the company is not compatible with the EU rules for aid to companies in difficulty and the European Commission opened an in-depth investigation about the issue.
Budport told Index that they never wanted to hinder or inhibit the operation of Malév GH. Their goal was to ensure the conditions of fair competition. Malév GH received a state subsidy of 4.5 billion forints, which exceeded its revenue. It was the ineptitude of the management that led the airline to total financial instability and bankruptcy, added Budport.
Andrea Bártfai-Mager, the minister without portfolio for national wealth is currently arranging the liquidation of Malév GH through the HNAM.