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MÁV sells property to stem decade of losses

Hungary's debt-ridden state railway is selling offices and unused train stations to raise as much as Ft 50 billion ($237 million) to help curb a decade of losses. Magyar Államvasutak Zrt, or MÁV, is planning to sell property worth Ft 8 billion to Ft 10 billion annually for the next five years, Deputy CEO István Heinczinger said in an e-mail, in response to questions. The Budapest-based company's property is worth around Ft 350 billion. The rail, which has been on the brink of bankruptcy for years, has accumulated Ft 332 billion in debt. It expects the property sale, along with the termination of routes on 12% of its train tracks, to help it mitigate a drop in rail traffic in Hungary and the region. The company, Hungary's largest employer with 38,000 workers, is also selling its cargo unit and cutting jobs. „The property sales may take place through inviting bids, auctioning or setting up a joint venture company,” Heinczinger said. He expects MÁV's operating loss this year to be the same Ft 80 billion as in 2005. Reducing losses at MÁV largely depends on Hungarian state subsidies „and only to a little extent on measures in which MÁV is in charge,” Heinczinger said. The rail gets Ft 74.5 billion a year in subsidies. For its part, MÁV is planning to cut wage, administration and energy expenses next year, along with 2,570 employees or 30% of all administrative jobs, Heinczinger said. MÁV will also manage the sale of its cargo unit, which operates four transport and warehouse subsidiaries and employs 3,100, he said. Economy Minister János Kóka unveiled plans to sell the unit within a year on July 5. Heinczinger declined to say how much MÁV expected to earn from the sale. The company was fined Ft 1 billion by the competition office in July for abusing its dominance in the freight market and accused of violating Hungarian and European Union competition rules. The rail was charged with levying unreasonable costs to competitors in freight transport, delaying access to industrial sidetracks and signing long-term exclusive transport agreements with the biggest freighters, preventing access for new entrants. (Bloomberg)