KrasAir Flies to Hungary
// It will soon have Malev planes at its disposal
Aviation Transport
The State Privatization Agency of Hungary announced yesterday that the Airbridge Rt Company, which is friendly to private stockholders of Krasnoyarsk Airlines, has made the best offer for the state package (99.95 percent) in the national Malev Airlines. This has been confirmed to Kommersant by Boris Abramovich, general director of KrasAir, who said that the final conditions for the purchase-sale of Malev will be agreed upon next week and the deal closed on August 15.
A href="http://www.malev.hu/" target="_blank" class="textlinks">Malev owns 28 planes, including 15 new Boeing 737 Next Generation craft, and carried 2 million passengers last year. The airline has a debt of $178.8 million.
Krasnoyarsk Airlines occupies fourth place among Russian airlines by passenger haulage with 1.9 million passengers in 2004. Its income was 8.4 billion rubles, of which 9.4 million rubles was net profit. The controlling stock package in KrasAir is owned by the state and the remaining shares belong to persons and legal entities friendly to Boris and Alexander Abramovich, the brothers who manage the company. Last year, they formed an aviation alliance with the support of state officials that now includes four airlines in addition to KrasAir and has taken the brand name AiRUnion.
This is not the Hungarian government's first attempt to sell Malev. The most recent attempt was in December 2004. One of the main conditions of the competition for the state package in it was the payment of Malev's debts. It only became known in the spring that Russian companies were participating in that competition. Formally, the application was filed by Airbridge Rt, which was registered in Hungary by private stockholders in KrasAir. “If we are successful, that acquisition will allow us to integrate ourselves into an international network, speeding up a process that would otherwise take decades,” KrasAir told Kommersant for its March 16 coverage of the competition. There were two and four companies competing with KrasAir at various stages of the process.
On April 1, the State Privatization Agency of Hungary declared the tender for 99.95 percent of Malev stock invalid but began negotiations with the competitors. It reached a decision yesterday. Boris Abramovich told Kommersant that it was decided that KrasAir was the best contender and negotiations with the others have ceased. Reuter's distributed somewhat different information yesterday: “Of the two contenders that continue the competition, negotiations will begin first with Airbridge, which has the more attractive offer.” Local media report that the British investment company Argus Capital and the Aviation Solutions company, which belongs to former Malev president Ferenc Kovacz.
Abramovich told Kommersant that “I will go to Budapest next week to agree on the conditions of the purchase and we plan to sign the contract on August 15. He refused to name the sum that Airbridge offered for Malev, saying only that the purchase conditions went beyond “servicing the debt” to expanding the airline's network of flights and outlining a development strategy.
The purchase of a foreign airline by Russian businessmen is a precedent. Malev's main selling points are its fleet and flight network, which encompasses all of Europe. Other market participants took a somewhat dimmer view of the deal, however. “It is a very interesting, brave and expensive project,” commented UtAir general director Andrey Martirosov. “The KrasAir alliance will receive an Eastern hub in Europe to supplement their hub in Krasnoyarsk, trained personnel and a technical base for servicing Western aircraft. The difficulty, beside the economic aspect, is in the basic organization. In particular, in having the opportunity to use Malev's planes in Russia.” At another large airline, Kommersant was told that “It would be logical to concentrate all their financial and managerial resources in Russia, especially since the domestic air-travel market is clearly entering a period, if not of decline, at least of stagnation.”
Sergey Ryzhkin, Anna Volkova
All the Article in Russian as of July 29, 2005
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Photo: Dmitry Lebedev
