beyondbrics

State-owned Malev Hungarian Airlines threw in the towel and grounded all flights on Friday morning after failing to find a solution to liabilities of as much as Ft160bn (€548m).

In a statement on its website, Malev said that in spite of “undiminished” passenger confidence, suppliers had begun to demand advance payment. As a result, “cash outflow has accelerated to such an extend that the airline’s situation is untenable.”

Quick as a flash, Wizz Air, a low cost operator run by a former Malev CEO, offered a “special rescue package” to passengers affected by Malev’s grounding, offering to cover Malev tickets for domestic and European routes for a charge of €34 a leg:

Passengers who hold a valid Malev electronic ticket for travel between February 3rd, 2012 and March 24th, 2012 can call the Wizz Air call centre at +36 1 358 6565 to benefit from the 9900 HUF fares (all inclusive, one way). Seats are subject to availability and flights must be rebooked by 6pm February 13th, 2012.

Malev owned up to debts of FT60bn on Tuesday, on top of about Ft100bn it will have to repay to the state following a European Commission ruling in January branding payments it received between 2007 and 2010 as illegitimate. With the state banned from providing any further bail-outs, the airline made a last-ditch scramble to find a buyer but to no avail.

But Viktor Orbán, Hungary’s prime minister, has not given up hope. This from Reuters:

Prime Minister Viktor Orban told Kossuth radio on Friday that the decision to ground Malev was made after two aircraft were not allowed to take off from Tel Aviv and Ireland due to Malev’s debts.

Orban said despite the stoppage he believed the country needed a national airline if it could find investors willing to invest in it. “It is painful … We tried to keep Malev operational as long as possible, but we could no longer do it as we would have lost our aircrafts seized abroad … We had to stop,” Orban told Kossuth radio.

“But I think restarting (the airline) is not impossible, and if we can get rid of the burdens inherited from the past, there could still be a Hungarian national airline.”

Malev had been flying for 66 years, has a fleet of 22 aircraft and accounted for 40 per cent of revenues at Budapest’s Liszt Ferenc Airport.