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This time, state must sell Malév, says Russian suitor Abramovich

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The Hungarian state must sell national carrier Malév in its latest privatization, as this is the only way to rescue the airline, Boris Abramovich, whose company AirBridge was the front runner in an earlier, scrapped bid for the airline, told a press conference in Budapest on Wednesday.

Abramovich could not say when the current new round of privatization talks for Malév would end. AirBridge is one of three bidders who are negotiating with the Hungarian privatization agency ÁPV for the airline's sale. The other two are the investment unit of Lithuanian airline LAL and the businessman Ofer Hava, backed by a group of Irish investors. AirBridge's plans for Malév remain unchanged from the previous tender, Abramovich said.

Though noting he could not reveal any details of the offer under a non-disclosure agreement, Abramovich said Malév was in need of an immediate $30 million - $50 million capital injection to preserve liquidity. Further injections will depend on the script the State Privatization and Holding Company (APV) approves for the airline, he added. Abramovich said that AirUnion, an alliance of Russian airlines he owns a big stake in, could allow Malév to break onto markets in the East and Southeast Asia. He noted that every new flight attracts 30,000 passengers a year on average thus the cooperation with AirUnion would significantly boost the number of Malév's passengers.

A partnership would also allow AirUnion to break onto the European market. Abramovich added, that Malév would be considered efficient if its load factor increases from the current 60% to at least 72%-74%. If AirBridge buys Malév, the purchase would mean a big boost in business for Malév's aircraft maintenance unit Aeroplex, as AirUnion's fleet - to reach 30 Boeings by year-end - would place significant orders with the unit. If AirBridge does not win the tender, AirUnion will build its own base for aircraft maintenance.

Abramovich pointed out that AirUnion already has recently entered into a strategic partnership with a European airline, Austrian Airlines, which is practically a code-share agreement. Asked how AirUnion intends to finance its $400 million of Superjumbo-100 aircraft purchase, announced just days earlier, Abramovich answered through a leasing arrangement or with financial resources, without revealing further details. He said the financing tender will be invited within days but did not reveal how that would affect the indebtedness of the five airlines to be merged soon.

Answering a question, Abramovich said the five members of the AirUnion alliance would merge into a single airline, also to be called AirUnion, by January. The state's holding in AirUnion is expected to become a minority stake after the necessary legislation is signed by the Russian president, with private businesspeople holding the remainder. (Mti-Eco)

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