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Russian consortium seals deal for Hungarian state airline Malév

Russian-backed consortium AirBridge on Wednesday officially took control of former Hungarian state airline Malév in a deal worth over $100 million.

„Representatives of the state symbolically handed over the shares to the AirBridge consortium,” Hungary's state privatization agency ÁPV said in a statement. ÁPV said the deal was one of „this year's biggest privatization” and added that the total value of the investment promised by AirBridge came to  Ft 26 billion ($144.5 million). AirBridge, which is owned by Boris Abramovich, has agreed to pay a modest sum for the debt-ridden airline, but will have to shoulder other major costs. The fee for the firm is only Ft 200 million, but AirBridge also had to promise a huge capital injection and commit to paying off the airline's debts. AirBridge has committed to injecting €50 million ($68.2 million) into the debt-ridden airline, and the agency said €20 million of this has already been paid. ÁPV said that AirBridge provided a €32 million bank guarantee for a Ft 20 billion loan underwritten by the government. The consortium has also promised to either pay back or refinance loans worth a combined Ft 13 billion by the end of 2007, when a state guarantee on the loans expires.

Abramovich - who also owns Russia's fourth-largest airline KrasAir - has promised to bring the airline into the black within two years. He also said that passenger traffic would grow by up to 25% annually and promised there would be no mass layoffs. AirBridge beat off competition from several competitors, including Lithuania's LAL, to seal the deal. (