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Hungary selected three bidders for next round of airline sale

Hungary picked three bidders for negotiations to sell state airline Malév Zrt in the government's seventh attempt to find a buyer for the unprofitable carrier.

The Hungary's asset-sales agency, State Privatization and Holding Company (ÁPV), selected Ofer Hava, an Entrepreneur who is in a group with former Aer Lingus Chairman Tom Mulcahy, Airbridge Zrt, a local investment vehicle for OAO KrasAir owner Boris Abramovich, and Lithuanian airline owner LAL investiciju valdymas, according to an e-mailed statement. Hungary spent more than Ft 16 billion (€58.9 million) propping up Malév as the company struggled with debt and competition from discount carriers like EasyJet Plc after the country joined the European Union in 2004. A year ago, it gained affiliate status with British Airways Plc's Oneworld Alliance. Sky Alliance Zrt, a group of former Malév employees, was ruled out of the bidding.

Malév, which was founded in 1946, has Ft 30 billion of debt and posted a loss of Ft 9 billion last year. Hungary's state asset-sales agency said yesterday it's looking for a buyer with enough financial backing to rescue the airline. KrasAir, Russia's fifth-largest airline, is trying for a second time to buy Malév to enter the EU and connect the Hungarian carrier to its alliance serving Russia and Central Asia. Abramovich is bidding through his AirBridge Magyarorszag Zrt vehicle and said in an interview in Budapest on October 25 he planned to set up an investment program for Malév. Hungary canceled KrasAir's last offer in August 2005 after both sides failed to reach an agreement. Labor unions and politicians complained Malév was being sold for too little.

The government now plans to sell Malév at any price because the company is in so much debt, the Népszabadság newspaper reported on November 3, without citing sources. Ofer Hava is owner of Home Center Zrt, a property developer, according to an e-mailed statement from the group's public relations company. Mulcahy, former CEO of Allied Irish Banks Plc, resigned as chairman of Aer Lingus in May 2004 after a newspaper reported he was one of five executives the bank was investigating over tax issues. He quit because of the „adverse publicity on Aer Lingus as a state company by association,” he said in a letter to the government, which at that point controlled the airline. LAL investiciju valdymas owns Lithuania Airlines, or flyLAL, which was founded in 1991 after the Baltic state won independence from the Soviet Union.

LAL would offer €120 million for Malév, representative of Lithuanian investment company Zia valde, Gediminas Ziemelis, told Lithuanian daily Lietuvos Rystas late last month. "We have offered to make further financial investments into the company and take over a share of funds guaranteed by the state. The total value of the project would reach 380 million - 414 million litas (€110 million - 120 million) in one or two years," Ziemelis told the daily. A fourth bidder, Sky Alliance, a company set up by former and current Malév pilots, was not named by the board. APV announced the tender for a 99.5% stake in Malév on September 7. LAL is owned by investment group LAL investiciju valdymas, whose three main shareholders are IT company FIMA, investment company Zia valda and logistics company Sanitex. (Bloomberg, Mti-Eco)