Prime Minister Viktor Orban told Kossuth radio on Friday that the decision to ground Malev, which was placed under creditor protection earlier in the week, was made after two aircraft were not allowed to take off from Tel Aviv and Ireland. In a December white paper, the government said the potential loss of the airline, which spent about 50 million euros a year on air service charges and real estate fees, could jeopardize the operation of Budapest Airport. The airline accounts for 40 percent of turnover at the airport, owned by Germany's Hochtief and four financial partners. "If this situation continues for a longer period of time, then we will obviously have to revise our business plans for this year and all our contractual obligations," Mihaly Hardy, a spokesman for the airport, told Reuters. "There are some estimates that over 20 or 23 routes of Malev will never be served by other airlines," he added. Malev said its suppliers had lost confidence and started to demand advance payment for their services, while the government could no longer provide cash injections for the company following a European Union ruling last month. "This has accelerated the outflow of cash to such an extent, that by today the situation of the airline has become unsustainable," Malev said on Friday. "The board, in order to minimize losses, has ordered a halt in operation of the Hungarian national airline." All flights were grounded from 0500 GMT. The airline's www.malev.hu website was taken offline and replaced with a message informing passengers about compensation options.
The stoppage comes after the airline was ordered by the European Commission last month to repay millions of dollars worth of state aid received between 2007 and 2010, the equivalent of its entire 2010 revenue. "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," Prime Minister Orban said. "But I think restarting 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 has a leased fleet of 22 passenger aircraft.
