Malev Hungarian Airlines

Topics: Flag carrier, Oneworld, Air France Pages: 15 (4863 words) Published: June 21, 2013
Malev Hungarian Airlines

* History
* Situation Analysis
* Environmental Scanning
* External Scanning
* Internal Scanning
* Strategies, New Mission & Objectives
* Portfolio Analysis
* BCG Matrix
* Strategy Implementation

Malev Hungarian Airlines (Magyar Légiközlekedési Vállalat) was founded in 1946 as the principal airline and flag carrier of Hungary until its bankruptcy in 2012. Located in Budapest International Airport, the airline flew to more than 45 destinations in 34 countries, with a fleet of 22 aircrafts. Hungarian civil aviation was led by small firms such as Aero Rt. (in 1910), Maefort and Malert. However, because of WWII, these airlines were not able to continue their operations and were forced to suspend their flights & services. March 1946 witnessed the foundation of the Hungarian-Soviet Civil Air Transport Joint Stock Company (Maszovlet), later known to be Malev. In 1956, Malev was created through the acquisition of all Soviet shares in Maszovlet. The airlines continued to expand in its fleet, with buying more aircrafts, as well as expanding in its destinations, by extending flights to cover nearby countries. With the fall of the Soviet Union, Malev stopped operating with Soviet-built aircrafts, such as Tupolev and Illyushin, and began using “western”-built aircrafts, such as Boeing. This move showed clearly that the country, amid 1989 political changes in the country, was trying to get out of the shadow of the Soviet Union, with most of the central European countries struggling to get rid of their communist regimes. In 1984, Malev was admitted as a full-right member of the International Air Transport Assocatioan (IATA), and by 1990, Malev was carrying over a million passengers per year, reaching 40 destinations in 30 countries, it also managed to be among the top 10 Hungarian companies. In 1992, Malev acquired new Boeing aircrafts and started conducting long-haul charter flights; it reached North America by 1993. In 1999, the Hungarian State Privatization Company APV RT. Acquired 99.5% of Malev shares, but was constantly trying to privatize the company. It finally was sold to AIrBridge Zrt. in December 2007, after joining OneWorld Alliance earlier in March 2007. The new CEO was Lloyd Paxton, who was appointed in 2007, and noticeably the first CEO to come from within the airline industry. Yet, however, he remained in his position for only two months, before being replaced by Peter Leonov, to continue the shaky management legacy. AirBridge Zrt. was struggling and facing a lot of financial difficulties, so a Russian state-owned bank (Vneshekonombank) acquired a minority stake of 49%, while the majority 51% remained in Hungarian ownership. This move definitely meant a new CEO, Martin Gauss. He, however, was very successful with the airline, but remained in his position until 2010, when the government decided to set 8000 Euros salary limit for all managers heading a state-owned company. Malev was then once again renationalized in February 2010 with the state-holding company MNV acquiring 95% of the airline’s shares, while the 5% remained with AirBridge Zrt. At the end of 2010, the European Commission decided to start an investigation on illegal governmental subsidies to Malev, based on complaint by Wizzair, the domestic low carrier competitor.

Situation Analysis
Malev ceased its operation on 3 February 2012, being not able to fund its own operations, after the EU decided that the government subsidies received by Malev was illegal. Malev was asked to repay all of the governmental subsidies it received from 2007 to 2010, which were about 130 million Euros, a sum equal to its entire 2010 revenue. Obviously failing to do so, Malev declared its bankruptcy, with $270 USD million debts. With 2600 employees and operating more than half of the air traffic in Budapest International Airport, Malev carried more than...
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