Hungarian airline Malev collapses

Image caption,
Malev is part of the Oneworld airline alliance, which also includes British Airways

The Hungarian national airline Malev has folded after its financial situation became unsustainable.

"At 0500 GMT... after 66 years of almost continuous operation Malev will no longer take off," it said.

It came after the European Commission ordered Malev to repay various forms of state aid received from 2007 to 2010.

The sums involved amounted to 38 billion forints (130m euros; $171m; £108m), a sum equal to its entire 2010 revenue.

"Despite its best interests the owner can no longer provide financial resources for the operation of the airline in the wake of the condemning decision of the European Commission," an airline statement said.

The European Consumer Organisation, which "defends the interests of all Europe's consumers", said the news came after Spanair's collapse in the very same week.

"This development is yet more incontrovertible proof that the current update of European legislation on air travel must incorporate a mandatory guarantee against airline bankruptcies," it said.

'Inherited skeletons'

The carrier employs 2,600 people and is responsible for close to half of all air traffic at Budapest Liszt Ferenc airport.

Part of the Oneworld airline alliance, which also includes American Airlines and British Airways, Malev has a leased fleet of 22 passenger aircraft.

In 2010 it posted a loss of 24.6bn forints, although an improved 2011 figure had been predicted.

Chief executive Lorant Limburger said the immediate reason for the collapse was the demand for upfront payments by its suppliers.

Prime Minister Viktor Orban said on state radio that two Malev planes were still overseas, one in Tel Aviv, the other in the Irish Republic.

The premier said those planes were not allowed to take off because of Malev's debts.

He told radio station MR1-Kossuth that Malev may possibly be relaunched "if we manage to get rid of the inherited skeletons".

On Thursday, Hungary's government appointed a receiver to the airline to try to protect it from creditors' claims.

Hungarian newswire MTI had said that 64 Malev flights were scheduled to fly from Budapest on Friday.

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