December 19, 2008
Hungarian airline Malev suspended an extraordinary shareholders' meeting on Friday which was meant to resolve the capital problems of the company, Malev said in a statement.
It said the meeting would be reconvened within 30 days but declined comment on local press reports which said Russia's Aeroflot might acquire a stake in the company.
Business daily Napi Gazdasag said on Friday Malev had significant debts and that the shareholder meeting may discuss a potential change in ownership.
Malev, which Hungary sold last year to AirBridge, a firm part-owned by Russian businessman Boris Abramovich, said the meeting, to be held within 30 days, would provide a solution for the situation of the struggling company.
"Malev, similarly to other players in the aviation industry, has faced numerous difficulties this year, such as the huge rise in the price of jet fuel in the first half of the year, the intensifying global recession in the second half, and the strike of Budapest Airport workers from December 10," it said.
"Despite all these (factors) the airline is operating and the shareholder meeting... which will continue in 30 days, will resolve the capital situation of Malev," the firm added.
Malev said the strike at the airport operator had forced it to cancel around 96 flights departing from Budapest, causing losses of several hundreds million forints.
In September, Malev said it expected to post an operating loss this year after jet fuel costs surged.
Earlier this year, Malev signed a financing deal with a Russian bank for a loan of EUR30 million euros to help maintain its liquidity position.
"The main problem for our company is not its outstanding debts, which are not unusually high considering the industry... It is primarily the method of resolving the capital situation which needs to be decided," the company said.
Malev said earlier this year it would lay off 400 staff, or around 21 percent of its active work force, and halted long-haul flights to Toronto, New York and Bangkok.
On Friday it said its work force had been cut by 250.
(Reuters)
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