It would be so nice being able to report here that the Hungarian government has finally found the magic bullet and their buying back of MALEV Hungarian Airlines was the first step in making the ailing company healthy again. Unfortunately, nothing could be further from the truth. It was politics that has given MALEV a new lease on life with no magic bullet in sight.
This was painfully evident in the interview with MALEV’s CEO Martin Gauss, shown in the morning program of Hungarian television aired on 4 March. The poor guy was trying to explain why he believed they had a good plan and in the process described how MALEV will first shrink, then grow, how they will copy the good things from the low-cost airlines and reject the bad ones… Nothing that we have not heard before and nothing that has actually worked for others in a similar predicament.
MALEV looks back on a proud history that started on 26 November 1950 when the company began independent operations as the successor of MASZOVLET, a post-war enterprise run together with the Russians. As the national flag carrier, MALEV flew far and wide, providing the vital links to Europe and the Middle-East during the communist years. Its Russian built aircraft were fuel guzzlers and the productivity of the company was nothing to write home about… But back then such things were of no consequence. The State had deep pockets and all holes created by the national carrier were plugged immediately.
When capitalism finally arrived in Hungary twenty something years ago, MALEV, like many other old names in the country was faced with the cruel realities of real competition. In all fairness we must add that the predicament of MAELV was perhaps even worse than that of the others because competition in the airline world is so much deadlier than elsewhere.
MALEV soldiered on gallantly, its management changing repeatedly. One can only surmise what the airline’s employees must have felt as they carried the burden of the company while never being sure what next week might bring.
For a time, Alitalia took an interest in MALEV but the liaison did not prosper and was soon broken off. The Hungarian government was of course keen to privatize MALEV like it did most other State enterprises but for a long time there were simply no takers. The big players were after the likes of Swiss and Austrian, most recently even Brussels Airlines (all of which became Lufthansa) but poor MALEV was apparently of no interest to anyone.
In the end, MALEV was sold to the Russians, prompting an outcry from the opposition parties in Hungary. That this decision was perhaps not the best one is demonstrated by the fact that the airline company is now back in the hands of the Hungarian government whose intervention has saved MALEV from bankruptcy and possible disappearance from the airline scene. They were saved… for now.
With general elections coming up in April, the current socialist government, set to get a beating from the opposition right, was obviously loath to let MAELV fail with its employees and scores of others at its suppliers joining the swelling ranks of the unemployed. With unemployment running at around 10 % one can hardly blame them… Of course from a business perspective and the long term interests of the economy, such political decisions often spell disaster. But there is worse. The opposition parties who are set to win the elections seem to believe that every nation must have a national airline, otherwise you are a lesser folk and will be overrun by the capitalists. Outdated and costly idea to be sure, but they have a bunch of those and still need to grow up to realize the error of their ways. But this is a lucky circumstance for MALEV, as it is very likely that the incoming government will continue to swallow the losses for a time at least…
In a country with 30 thousand children going to school hungry every day and pensioners freezing to death in their homes because they have no money to buy coal, saving a struggling airline probably does appear as the worst possible way to spend the state’s money. Wanting to keep an airline because it is seen as a symbol of national pride is sheer folly. So, what next?
The most important thing is for the people of MALEV to realize their incredible good fortune. In other parts of the European Union they would long ago have joined the sad ranks of bankrupt air carriers, vacating the field for better run, more efficient new ones as dictated by the competitive airline world. By a very lucky combination of politics and misplaced national pride, they are getting another chance to prove that they can make their company competitive and a player worth its place among the great airlines of the world.
This will require sacrifices. Yes, more sacrifices and the ones already brought will not be counted. This is a new world, new chance and new opportunity. There will be those who will inevitably have to go, others will have to work more and possibly for less money. But with a bit of luck they will still have a place to work in two years hence.
Is MALEV worth saving? Absolutely but it must be done without State aid and without nationalist sentiments. It must be done using sound business logic and business decisions.
Sorry chaps, there is no other way!