With Hungary going cap in hand to the IMF, the European Commission has ruled that the government can no longer afford to bail out its flag carrier with loans that are way below commercial rates. The Commission has ruled all financial support given to Malev to be unlawful and ruled it must repay all loans.
Malev has borrowed 5 billion forint ($20 million) in December, €76 million 2003, a 4.3 billion forint cash facility, deferral of tax and social debt of 13.8 billion forint, capital increases of 25.4 billion forint and 5.7 billion forint, shareholder loans of 14.9 billion forint and the subsequent conversion of part of these loans into Malev shares.
Hungary has been tasked with the calculation of how much the airline needs to repay, which is expected to be tens of billions of forint. The government remains committed to helping Malev survive however and is in “advanced talks” with possible investors. Who those investors are however is not known since China’s Hainan airlines withdrew from negotiations and Hungary bought out Vnesheconombank’s 95% stake when a previous privatization failed. With Hungary needing to meet forint financing goals of about €15 billion this year, the government cannot afford to be too picky.
EU orders Malev to repay government loans
