Should MALEV be saved?

Do you remember the term “flag-carrier”? This was usually applied to the airline of a country which was seen as the object of national pride. As recently as a decade ago, when new States came into being, no matter how small, one of their first acts had been to create a national airline (often followed by an air traffic control centre… but that is another story). Of course the aviation marketplace has changed in a big way, there is intense competition between companies, and being a flag-carrier has all but lost its patina.
Airlines have disappeared from the scene, some are gone completely (SABENA) others live on wearing the guise of companies that took them over (Northwest) and still others have kept their colors and name but are now just a division in a mega-carrier (Austrian and Brussels Airlines in Lufthansa, KLM in Air France). Most of them had one thing in common: their long (and not so long) term prospects were all but rosy. Surviving on national pride was not an option.
The problem with Malev is that many in Hungary want to save it because they believe that a country must have a national airline. They also claim that a country’s independence is reduced if it does not have its own airline. These are the worst possible reason for trying to save an ailing company and it costs a lot of taxpayer money before the company folds anyway.

Malev is on a three year run to return to profitability. But it needs debt relief and new shareholders to be able to execute the plan… a vicious circle if ever there was one.
When Malev was sold to Russian interests a few years ago, there was an outcry in many quarters, again for the wrong reasons. That Mr. Abramovich’s investment enterprise would go bust could not be foreseen (just as Swissair’s was ultimately a surprise) and not selling something to the Russians on principle is not exactly the best business attitude either.
Water under the bridge… here is Malev to-day with 100 million in dept plus other obligations to a bank owned by the Russian government. Malev also has 44 % market share at Budapest Ferihegy airport…

With elections coming up in Hungary in 2010, the current government said they might consider swapping the debt for equity in the company. Of course… who wants to see a big employer like Malev going under in an election year? But again, this is the wrong reason for saving a company.
What everyone should think about is the story of Austrian Airlines and Brussels Airlines, now both part of the Lufthansa group. It took many arduous years for Lufthansa to get their hands on those two carriers but LH went after them with gusto… even in the face of a few truly outlandish demands by the competition czars of the European Commission (who at one point demanded that a new airline be established to serve the German market from Brussels to compensate for the “loss” of Brussels Airlines). Austrian tried all kinds of tricks to solve its problems before finally admitting that there was no other way than to marry Lufthansa.
The question to ask now is: why was Malev not a target for Lufthansa? Or for any of the other giants who were on a shopping spree at about the time Malev was first on the blocks and who were again looking for things to buy more recently?
Malev has a relatively young fleet, low lease prices, an excellent safety record and a home base, Ferihegy, that is in many ways to most modern in Europe. True, the company’s practices needed a major overhaul and this has now been done but more will be needed. That means more money and that is one thing the company does not have… yet.
So, should Malev be saved? Was it worth saving Austrian Airlines or Brussels Airlines? Lufthansa certainly thought so. But their purchase of BMI was less successful and they are now ready to give it away for naught… You get the picture?
From the perspective of Malev’s employees, the thought of their company going bust must be a nightmare. For them saving Malev is a no-brainer. The question of who will pay leaves them cold.
The picture is very different from a business perspective.
The people and management of Malev, the government and the unions must all get together and look at that picture realistically. Forget national pride and fears about losing independence. Can Malev make itself attractive as a business proposition, on its own or as part of a bigger company, can it prove that it can do it?
If the answer is yes, then all possible help is in order and must be given.
If the answer is no, the sight of a 737 arriving on its last MAH flight, being greeted by the fire engines spraying a white veil of mourning over the fuselage, is a question of when and not if…
Let’s hope the answer will be yes.