PETER BENNETT VIENNA Malév has admitted for the first time that it is to seek direct talks with all five of the global alliances, after a consultancy report from SH&E labelled this a top priority for the Hungarian flag carrier's privatisation.

A Malév board meeting in early November decided to begin informally approaching all the alliances after considering the SH&E report. But almost immediately, British Airways, which had been favourite to grab a stake before a new government stopped all Hungarian privatisations in 1998, re-started talks.

John Paterson, BA's director of alliances, travelled to Hungary for talks with the country's infrastructure minister Kalman Katona, who is in charge of the privatisation, and said that BA would be "flexible" over the purchase of a stake.

Talks between BA and Malév were at an advanced stage until the government suspended negotiations in 1998, but following the announcements in September that SAir Group was to buy a stake in Poland's LOT and Austrian Airlines was to join the Star Alliance, BA is thought to be keen on tying up a deal with Malév to add an east European carrier to the oneworld alliance.

The Hungarian flag carrier is fully state-owned after two local banks last year gave back the 35% stake they had acquired when Alitalia was forced to pull out of its alliance with Malév.

The carrier says it wants to develop Ferihegy Airport as a regional hub and in recent months has made moves to expand its route network to include Zagreb, Sarajevo and Tripoli.

A new alliance partner will almost certainly have to purchase an equity stake however and/or participate in a capital investment programme which will include the funding of new aircraft. Although Malév has expanded its network recently, it has also been forced to curtail services to Bucharest and Prague because of a lack of aircraft.

The Polish Government's choice of Swissair over BA for the 38% stake in Lot came after intensive lobbying by BA, but the Polish Treasury Ministry said that the Swissair bid was better than its rivals.

The final decision on a Malév's partner is not expected before the end of the year although negotiations will be stepped up.

Source: Airline Business