Hungarian flag-carrier Malev's financing is to be investigated by European regulators who suspect that the airline may have been granted illegal state aid by the country's Government.
The European Commission is opening a formal inquiry into several support measures taken on behalf of the loss-making airline, including capital injections and shareholder loans.
"In particular, the Commission has doubts that Malev would have been able to obtain financing from the market on the terms conceded by the Hungarian authorities," it says.
Malev underwent a privatisation process but, earlier this year, was brought back under the ownership of the Government.
The Commission says it is particularly concerned about financing arrangements including the Government's taking over a 2003 loan to Malev in 2007.
Malev was also granted a capital increase in February this year, shareholder loans in April-July which were converted into shares in the airline, and capital increases and loans in September.
Other aspects under scrutiny include a tax deferral and cash facilities granted during its attempts to sell its ground-handling operation.
Malev's financial condition has caused the Commission to suspect that it would not have obtained financing on generous terms had it sought support from the private sector.
"After a preliminary investigation and considering the facts currently at its disposal, the Commission has doubts as to whether, given the difficult financial situation of Malev, the airline would have secured such financing on the market on the same terms or at all," it says.
"Moreover, the Commission also has doubts as to whether these measures meet the criteria of the Commission's guidelines for the rescue and restructuring of firms in difficulty."
It points out, however, that the opening of an inquiry does not necessarily mean that support to the Hungarian airline has contravened any state aid regulations.
Source: Air Transport Intelligence news
