Malev Late Paying Wages As Conditions Deteriorate

February 6, 2009

Hungarian national airline Malev said on Friday it was late in paying January's wages to employees due to financial difficulties, but it promised to make up all arrears this month.

Malev, which is expected to be taken over by state-owned Russian bank Vnesheconombank within weeks, promised to pay some of the late wages within days and the rest following the February 10 extraordinary general meeting, where the new Russian owner is expected to take over, the company said in a statement.

"Malev's reasons (for the late payment) are deteriorating economic conditions around the globe and in Hungary, Malev's own difficult financial situation, and lower turnover and revenue as a result of the seasonality of air travel during the winter," Malev said in a statement.

Malev has not paid any of its January wage obligations and promised to transfer HUF50,000 forints (USD$216.9) per employee as early as Friday and the rest later.

VEB, Malev's biggest lender, will take the company over from Russian businessman Boris Abramovic, while Russia's Aeroflot will become Malev's strategic partner, the Russian government said earlier.

Hungary's government expect its economy to shrink by up to 3 percent, and unemployment is seen peaking above 10 percent.