Fears Malév could be grounded "within days"

Hungary's flagship national air carrier Malév could run out of cash and be forced to ground flights "within days," index.hu reported on Monday morning.

The report follows a statement last Wednesday by government commissioner Gyula Budai that the airline faced an imminent threat of shutdown.

But while hopes for the company rose on Friday with reports that low-budget Spanish airline Vueling was in advanced negotiations to purchase the company, over the weekend the Spanish firm denied it had expressed any such interest.

Meanwhile, on Monday morning the government issued a decree designating the airline a "business of prime strategic importance," a designation that would prevent creditors of the company from initiating liquidation procedures against it.

According to Index.hu, Budai, who was tasked to complete a report on Malév's privatization in 2007 and re-nationalization in 2010, said the company's ownership structure (95% owned by the Hungarian state and 5% by a Russian bank) will make it impossible to find an investor because of the Russian minority owner.

In a decision early this month, the European Commission said Malév must pay back HUF 70-100 billion in subsidies to the Hungarian state it received between 2007 and 2010 because they were in contravention with EU regulations.

Budai said Malév's privatization in 2007 foreshadowed the current situation, for which "responsibility clearly lies with the previous Socialist government."

The appearance - and sudden disappearance - of Vueling as a potential suitor follows similar earlier expressions of interest from the Prague-based Travel Services charter airline, as well as China's Hainan, neither of which ultimately decided to go ahead with a takeover.

Editor's Note: This article was originally published on Friday, January 27th and modified on Monday January 30th to reflect changes in the ongoing story.

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