Mias kai mhlame gia Malev, deite ta kaka mandata pou pronwei h WSJ gia tous mikrous kai megalous ethnikous aerometaforees ths EE.
Weak Flag Carriers: Grounded
Europe's Privatizing Doesn't Fly
For Airlines With Chronic Losses
By KEITH JOHNSON in Madrid and MARTON DUNAI in Budapest, Hungary
Staff Reporters of THE WALL STREET JOURNAL
April 29, 2005; Page A15
Hungary's Malev Airline once was a source of national pride, flying the country's flag around the world. Now, Budapest is struggling with its fourth attempt to sell the floundering carrier.
The government's difficulties with unloading Malev demonstrate a quirk in Europe's privatization drive. European governments have successfully privatized high-value phone systems, power companies and even postal services in recent years. But selling off insolvent national carriers has proved nearly impossible for some countries, largely because of the airlines' symbolism for national sovereignty.
It is "totally delusional" for unprofitable state-owned airlines to expect to play a part in industry consolidation, says Keith McMullan, an aviation consultant in London.
Malev's woes, like those of airlines in Greece, Poland, Portugal and Italy, underscore how Europe's state airlines have quickly gone from trophy to burden. Not long ago, flying the flag was more important than turning a profit.
Years of state aid led to inefficient operations with coddled and bloated work forces. That support, paradoxically, has made it harder for many of Europe's flag carriers to survive. Almost a decade ago, European Union regulators cut off state aid to airlines. Many since have faced a steady descent.
Greece's chronically unprofitable Olympic Airlines , for example, had a loss of more than EUR100 million, or $129 million, last year, even though Athens hosted the Summer Olympics and the airline already had started restructuring for a planned privatization. Italy's Alitalia for years has been dogged by political meddling and government reluctance to stomach big job cuts, and estimates 2004 net losses at EUR850 million. Belgium's Sabena long was propped up by state support before collapsing in the wake of the Sept. 11, 2001, terrorist attacks in the U.S.
Many state carriers have wallowed as Europe's airline industry began a long-awaited shakeout. The pending purchase of Swiss International Air Lines by Germany's Lufthansa, following Air France's 2004 acquisition of KLM Royal Dutch Airlines -- both private-sector deals -- indicate that some carriers can attract buyers, even a chronically unprofitable operation such as Swiss International. The challenge is to become attractive.
Ireland's Aer Lingus shows how much work that requires -- but also that a turnaround is possible. Shortly after the Sept. 11 attacks, the state-owned carrier slashed staff and copied efficient practices of budget rivals, making employees work harder. Today, Aer Lingus is one of the world's most profitable airlines, with an operating-profit margin of almost 12%. The changes were spurred by the government's decision to stop aiding the airline, as politicians traditionally had done. Even Irish union officials now acknowledge that closing the government spigot was crucial to the airline's resurrection.
Without such changes, analysts predict few unprofitable airlines will last long in the face of high oil prices, discount competition and fierce price wars. As healthier carriers also face these problems, they are unlikely to snap up wallowing rivals. Alitalia, for example, wants to join the Air France-KLM linkup but has been rebuffed because of its sorry financial state.
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Yet airlines and their governments keep trying. Greece received five bids for a controlling stake in Olympic two weeks ago. The Polish government is trying to streamline flag carrier PLL LOT before attempting to privatize it. And the Italian government, which loaned Alitalia EUR600 million last year to cover a cash crunch, promises to make the airline profitable before full privatization.
Such restructuring plans usually have given way to political pressures because government officials fear the strength of airline labor unions. Cabin staff at Olympic staged strikes throughout 2004 after the airline announced tougher labor conditions in December 2003, and just last week Olympic workers staged another strike protesting the airline's planned privatization. Alitalia has suffered numerous strikes by staff this year protesting planned job cuts, and Italy has repeatedly backed down on aggressive restructuring.
In Hungary, the government last year failed to draw a serious offer for Malev after insisting that prospective buyers guarantee employment levels and routes. Budapest this year appeared ready to focus instead on price, but still demanded that buyers maintain Malev's flag-carrier status, rather than rolling it into a bigger operation. In March, the government scrapped its third go at privatization after bidders offered only token amounts in a tender. A new management team now is working to shore up Malev and hold direct talks with bidders; it says it has 14 interested parties.
"All the logic that normally accompanies the sale of a company can only prevail with limitations," says Gyorgy Geiszl, chief financial officer of Malev.
Mr. Geiszl says his airline's European landing rights and presence in the growing Eastern European market could attract an international airline to invest. He says he hopes Malev will be able to find an airline that will "work out a specific, tailored cooperation program instead of saying, 'there's an airline for sale in Hungary.' "
