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Wizz Air is outraged at the re-nationalization of Malév

Wednesday 3, March 2010

Wizz Air, the largest low fare – low cost airline in Central and Eastern Europe said it would immediately call on the European Commission to investigate the Hungarian government’s decision to yet again waste significant financial resources into Malév, the struggling and massively loss making national airline.

1) Wizz Air will challenge the legal basis of Malév’s re-nationalization

The re-nationalization of Malév raises serious questions over the legality of the transaction. The decision is clearly another case of illegal state aid, this time EUR 90 million worth of additional capital.

There has been no decision from the European Commission approving this transaction therefore if the Hungarian government implements the recently announced recapitalization of Malév, it would likely be an unlawful state aid as it clearly violates the state aid rules, it is discriminatory, distorts competition and provides no benefit to the consumer.

2) The Hungarian government is wasting further tax payers’ money on Malév

It is deeply concerning that the Hungarian state is wasting further tax payers’ money in these difficult economic times on an "investment" that makes no economic sense as clearly no private investor was prepared to make it. The same money could have been used on measures to alleviate the negative consequences of Malév's bankruptcy instead of pouring the money into prolonging the existence of the problem.

3) Malév’s re-nationalization undermines the basic principles of competition law of the European Union

Civil aviation is a sector where market liberalization has resulted in intense competition, to the benefit of consumers. Competition law (including state aid law) is there to protect such competition and the Hungarian government should respect the rules and guard - if not promote - competition instead of distorting it. The Hungarian government should let the market players that are able to operate efficiently to fill the gap that Malév’s disappearance would temporarily cause.

4) Malév is a non-viable business and will remain financially non-viable in the future

Malév is a non-viable business that has been managed in a financially irresponsible way resulting in record high operating losses in recent years. It is apparent that the customers’ need for the Malév product is marginal as less than 5% of the Hungarian population uses the services of the airline. The Hungarian government should learn from the examples of a number of European countries - such as Switzerland and Belgium – that have succeeded in efficiently managing national airline bankruptcies by fully respecting the EU competition law and rebuilding passenger traffic of the impacted airports (Brussels, Zurich and Milan Malpensa among others).

The Malév re-nationalization plan does not solve the issue as the airline will require continuous illegal financial aid from tax payers’ money going forward.

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