Posts Tagged 'Malev'

Lloyd Paxton Leaves Malev After Two Months, Peter Leonov Is New CEO

It was breaking news this morning that Mr. Lloyd Paxton, the British aviation expert, who has been named as CEO of Malév Hungarian Airlines only two months ago, has resigned. Actually the first news in Hungary stated simply that he was replaced, the official statement later during the day talks about a resignation due to “personal resons”, which are not disclosed upon his personal request.

He is replaced by Mr. Péter Leonov. Mr. Leonov until now has been vice-chairman of the board, and was the leading and key figure during the privatization process of Malév on behalf of AirBridge, the company that finally won the long privatization tender earlier this year and is partly owned by Mr. Boris Abramovich, owner and key figure of Russian AirUnion.

Mr. Paxton has launched an ambitious restructuring plan, called ReMAke (name is based on the two letter IATA code for Malev: MA), being assisted by a number of international consultants and around 70 involved employees. According to the news in the Hungarian Media, Malev is determined to continue with the restructuring plan that is aimed at cutting costs and increasing revenues at the same time. When Mr. Paxton was introduced as the new CEO two months ago, Mr. Abramovic had stated that he has two years to turn around the loss-making airline.

by balint01


“You don’t buy an airline, you buy the market”

A quotation from today’s news (resource: ATW Online)

CEO Alfred Oetsch said Austrian is facing growing competition on its routes to Eastern Europe and that in order to defend its critical Focus East strategy and “keep our position strong,” it will “consider whether to buy or take shares in one of the carriers in Eastern Europe.” He did not provide further details, but airlines from countries like Romania, Bulgaria or Moldova may be among the most likely targets. “You don’t buy an airline, you buy the market,” he said. AAG already holds 22% of Ukraine International Airlines and will increase its stake “whenever it is possible,” Oetsch revealed. “Just like we started our cooperation with AiRUnion, where we use Moscow Domodedovo as a hub, we would like to develop Kiev into a hub for us as well”

Mr Oetsch’s statement is a reaction on an earlier speech of Karim Makhlouf, CCO of Sky Europe who considered Austrian to be the weakest hub carrier in Europe, adding: “That is why we will attack them.”

Competition in the Central and Eastern European region is becoming stronger and stronger. Let’s analyze this situation a little bit deeper. First take a look at the allinace member airlines:

– Austrian Airlines (Austria): Member of Star Alliance, recently started cooperations with Air Union, the new owner of the neighboring country’s flag carrier, Malev

– Adria Airways (Slovenia): strategic partner of Star Alliance, emphasis is more on charter flights

– Croatia Airlines (Croatia): strategic partner of Star Alliance

– LOT (Poland): member of Star Alliance

If we take a look at a map, we will see that from geographic point of view Star Allaince’s weak point is the Eastern region: Romania, Bulgaria, Moldova, ex-Soviet countries, especially the Baltic countries.

– CSA (Czech Republic): member of Sky Team

– Aeroflot (Russia): member of Sky Team

Sky Team’s strategy in the region is perfect. Geographcally this is the ideal situation for an alliance.

– Malev (Hungary): member of oneworld allinace, owned by Russia based Air Union

Oneworld’s weak point is also Eastern Europe – same situation as for Star Alliance. So the questions that can be raised here are: Which alliance will be supported by Air Union, who started cooperation with Austrian not long before they bought Malev? If Kiev is the target for Austrian, am I correct that this question has already been decided and Air Union will support oneworld? If Kiev is the target – are they approaching Aerosvit? Well, it would be a good decision from their side. But if their cooperation with Air Union will go on, I would prefer Moldavian Airlines (same owner as Carpatair) to Aerosvit.

Besides strong network carrier competition, there are also some low costs who try to gain market in the region. There is Sky Europe with hub in Vienna/Bratislava and Wizz Air with hub in Budapest and Katowice and recently Ryanair, Easyjet, Air Berlin and many other Western European low cost airlines have started operation in the area. Again there are uncovered territories such as Romania, Moldova, Bulgaria, Ukraine. Definately Ukraine is the biggest market among these and it has a good hb role as well: the ex-Soviet countries can be easily reached through Kiev. The situation is the same with Moldova, although there are language concerns when it comes to hub role in their case.

After all this we are excitedly wating for the next announcements of Mr Oetsch and we will see what markets they will buy.

Malev’s Problems

An article from ATW online from yesterday:

Alliance membership, new owner have Malev targeting improvement

Friday June 8, 2007Malev Hungarian Airlines said its 2007 business plan will allow it to reduce significantly the operating and pre-tax losses suffered last year.

Buoyed by its membership in oneworld and its recent privatization, it expects to report a HUF7.5 billion ($40.1 million) pre-tax loss this year compared to HUF10.5 billion in 2006, along with an operating loss of HUF5.3 billion that will represent considerable improvement from the HUF10.8 billion deficit suffered last year.

Malev said its gains will be based on “increasing passenger traffic, an even greater market share and the impact on growth in traffic deriving from membership [in oneworld],” which it said will benefit its bottom line by HUF3 billion, in addition to “extremely rigorous cost management.”

New owner AirBridge has agreed to invest €102 million ($137.9 million) in the carrier (ATWOnline, May 7). Malev said its forecasted losses may improve further because its business plan “does not include the concepts of a new investor.” It carried more than 3 million revenue passengers in 2006, nearly 9% more than in the previous year, with revenue increasing 11% to HUF107.9 billion. Costs rose 10% to HUF136.6 billion.

Separately, Malev announced the appointment of former LOT Polish Airlines executive Piotr Ikanowicz as CFO and investment banking specialist Zoltan Mester as chief officer-infrastructural and portfolio management.

Let me add a sort comment to this article: what gives the basis to this estimation in June, when so far nothing has been changed since last year? Summer is the highest season of the travel industry. If the new people have just arrived at the company, they will need a few weeks to get involved in things and besides that the arrival of 2 people cannot change anything especially not within a few months. This summer is over, guys. And I bet this nmber will not be met at the end of the year. But let’s return to this topic then. 🙂

Earlier blog entry about Malev’s descend.

by Szafi

Malev’s descend

I’ll start blogging with my favorite topic: Malev. I had worked there for 5 years and I was the lucky one, who could recreate and manage the website first, then together with some friends we created the e-commerce solution and the e-ticketing sokution of Malev. Later I managed the project that introduced self check-in kiosks for Malev at the hub airport, Ferihegy.

Recently it has been a big hit in the media that Malev sells over HUF 1 billion (around EUR 4 million) online in a month. If you add it up, it equals 12 billion yearly. The total revenue of Malev is HUF 100 billion per year. This means that 12 billion is exactly 12% of the total sales. I do not have exact numbers in my hands at the moment, but the inimum other European airlines sell online is around 60%. So the question no journalist as ever asked the Malev CEO: why is this number so low? And how can it be that they stand in front of the whole media with such a press release that shows such a pathetic picture? The answer is that because probably no journalist in Hungary knows such trivia about aviation.

When we still worked at malev, we always emphasized the importance of using sales channels in the proper way. An e-ticket sold on the website of the airline is the cheapest ticket for the airline. Therefore the strategy to direct passengers to this sales channel should be very agressive. This is the proper way to keep up competition with low-cost carriers. BA, KL, LH and many other European network carriers who are pressed by the low-cost competition are aware of this and they took the right steps to that direction.

I guess it will take some tme for Malev’s professionals until they realize this. Apparently the new owner, Mr Abramovich, the owner of Air Union did not have any plan when he finally managed to buy the company from the Hungarian state after 2 years of tough fighting, which even included top level politicians. It is amazing how much effort they invested in buying the company, but we still see no point in it as nothing seems to change. The old management, who reached around HUF 16 billion loss last year (16% of the total revenue) is still there, there is no change neither in the bad fleet structure, nor in the schedule, nor in the weak sales activity. Money can still flow out through those wholes that were drilled by the management. I don’t really understand the goal of the new owner, but if the goal is to keep the company, something should be done very urgently.

Well, I hope for my ex colleagues that the goal is not something different.

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