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Hungarian government expects russian KrasAir to bid on Malév

Hungary is expecting Russia's OAO KrasAir to bid on its national airline Malév Zrt as the government makes a seventh attempt since the end of communism in 1989 to rid itself of the debt-laden carrier. „They took part before and we count on them to participate again,” Hungarian Economy Minister János Kóka said in Moscow on Friday after a meeting of the Russian-Hungarian intergovernmental commission. The government on September 7 called for bids for 99.95% of the Budapest-based carrier to be submitted by November 3. Hungary has spent Ft 16.2 billion ($75 million) propping up Malév over the past six years, yet the airline is still Ft 30 billion in debt and hasn't posted a profit since the 1990s. The country's most recent attempt to sell Malév a year ago was canceled after the government failed to reach an agreement with KrasAir, Russia's fifth-largest airline. Labor unions and politicians complained Malév was being sold for too little. Interest in the auction is „higher than we expected at the start,” Kóka said.

KrasAir is at the center of the Russian government effort to create a carrier that will compete with OAO Aeroflot, Russia's largest airline. The Economy Ministry on August 14 submitted a draft resolution to the government on the new airline, to be called OAO AirUnion, of which the government would hold at least 45% of the shares. The new airline would bring together six companies including KrasAir, OAO Domodedovo Airlines and OAO Samara Airlines. Malév is preparing to join British Airways Plc's Oneworld group, CEO János Gönci said in an interview in August. KrasAir could use Malév as a springboard to expand in Europe. Boris Abramovich, co-owner of KrasAir, will create a low-cost carrier in Russia with the help of the European Bank for Reconstruction and Development, Vedomosti reported September 19. The new carrier, dubbed Sky Express, will make its first flight in November or December from Vnukovo International Airport in Moscow and will operate 18 Boeing Co. 737-300s and 737-500s next year, the Russian newspaper reported. (Bloomberg)