Hungary Seeks European Airline Investor as Hainan Pulls Out

Hungary is talking with potential European investors about Malev Zrt., the unprofitable state- owned airline, after China’s Hainan Airlines withdrew from negotiations, Development Minister Tamas Fellegi said.

The Cabinet aims to create a “national” airline based in Budapest, majority-owned by a Hungarian or European Union-based investor, with less debt than Malev currently, Fellegi told reporters in Budapest today.

“The focus is not Malev but air travel,” he said. “Talks are at an advanced stage with the possible investors” and may be completed in the spring of 2012, Fellegi said.

The government won’t sell Malev until the European Union completes its investigation into state subsidies the airline received, Fellegi added. Malev may have to pay back “tens of billions” of forint because of the probe, he added.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Zoltan Simon at zsimon@bloomberg.net