Brussels, 09/01/2012 (Agence Europe) - The European Commission decided on Monday 9 January that financing granted to Hungarian national airline Malév between 2007 and 2010 in the context of its privatisation and renationalisation constitutes illegal state aid, as Malév would not have been able to obtain similar financing from the market on the terms granted by the Hungarian authorities. Hungary must now recover the unlawful aid from the beneficiary.
Companies in difficulty may receive state aid under the strict conditions set in the 2004 EU Rescue and Restructuring Guidelines. However, the measures in favour of Malév did not meet these criteria, because Malév could not demonstrate how it would become viable again under its current business model. Furthermore, Malév's business plan contained no compensatory measures to minimise the competition distortions brought about by the significant state support. Moreover, Malév had already repeatedly received state support over the last few years.
In 2007, after a number of unsuccessful attempts at privatisation, Hungary concluded a sales agreement with AirBridge Zrt. on the majority ownership of its national flag carrier, Malév. In December 2010, following press reports and information by a complainant about Hungary's intention to re-nationalise Malév, the Commission opened an in-depth investigation scrutinising the following measures: - the takeover in December 2007 of a €76 million loan granted to Malév in 2003; - a de facto cash facility during the abortive sale of Malév's ground handling subsidiary amounting to 4.3 billion forints (HUF); - a tax and social debt deferral of HUF 13.8 billion; - two capital increases of HUF 25.4 billion in February 2010 and HUF 5.7 billion in September 2010; - shareholder loans granted between May to September 2010 totalling HUF 14.9 billion; - the conversion of part of these shareholder loans (along with the interest owed thereon) into shares of Malév in September 2010. (LC/transl.rt)