Hainan Airlines Makes Bid For Malev Hungarian
Airlines
Hainan Airlines, China's fourth biggest carrier, is planning
to make an investment in Malev Airlines, Hungary's national
carrier. George Soros, the US financier, is the largest
shareholder in Hainan.
Malev Airlines is offering 99.9% ownership of the airlines
in a single-round tender. The management expects the new
owners to increase Malev's capital and assume US$175 million
of debt. The new owners will not be required to maintain
Malev's status as Hungary's national carrier; however,
giving that up would mean that Malev would not be able
to fly to destinations outside the European Union.
Hainan Airlines has recently started flights to Budapest
from Beijing to compete with national carriers including
Air China and China Eastern and China Southern. The airline
also has a ticketing agreement with Malev for flights
to other international destinations.
Hainan Airlines was founded in 1993 as a provincial airlines
for Hainan province in southern China. In spite of the
Chinese central government's efforts to consolidate the
number of airlines in China to five, the number of airlines
has continued to remain high. In this respect, the China's
airline industry mirrors the auto industry. China has
more than 30 auto makers, few of which are profitable,
mainly because provincial government's are unwilling to
stop funding of manufacturers and airline carriers, even
when they are making a loss. The central government has
been unable to rein in the provincial governments in these
areas.
In China, Hainan Airlines has a reputation for better
service than most other airlines.
Mr. Soros, who has made his fortune in foreign currency
hedge funds, is originally from Hungary.
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