Hungary′s national airline goes out of business | Europe| News and current affairs from around the continent | DW | 03.02.2012
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Hungary's national airline goes out of business

Hungary’s heavily debt-ridden national airline Malev has had to ground flights and stop operations just days after Spanish state-owned Spanair filed for bankruptcy in light of the European debt crisis.

A Malev machine flies above the River Danube

Malev was established a year after the end of WWII

Hungarian state-owned airline Malev has gone out of business. Flights were grounded, leaving over 7,000 passengers stranded and operations were shut down on Friday due to its "unsustainable" financial situation.

"At 0500 GMT on February 3, after 66 years of almost continuous operation, Malev stopped taking off," chief executive Lorant Limburger said at a news conference.

The airline has debts of around 200 million euros ($270 million) and has had difficulties finding new investors. Last month, the European Commission ordered Malev to repay state aid received between 2007 and 2010. The decision prevented Hungary from providing liquidity to the airline and prompted partners to ask for "payments in advance and claims accelerated incredibly. No company can honor payments months in advance," Malev chief Laszlo Berenyi said.

Budapest had moved Thursday to prevent a forced grounding of its airline, appointing an administrator to shield it from creditor claims and also declared it a "strategically important company."

Prime Minister Viktor Orban told state radio after Friday's announcement, that a new national airline could be established if investors were prepared to operate it profitably and risk their own money.

Aviation crisis

Spanair airplanes at the El Prat International airport in Barcelona, Spain

Spanair filed for bankruptcy not long ago

Malev's is not the only plight in European aviation in light of the euro crises. Spanish airline Spanair also filed for bankruptcy at the end of January.

A spokesman for the International Air Transport Association (IATA) predicts a net loss for European carriers of around 450 million euros this year.

Meanwhile, in response to Malev's announcement, the low-cost Irish airline Ryanair said on Friday it is planning 26 new routes from Budapest , Reuters news agency reported. The new routes are expected to be operating by April and will carry up to two million passengers per year.

sb/ccp (AFP, Reuters, AP)