The former chief executive of AIB and ex-chairman of Aer Lingus, Tom Mulcahy, is leading a consortium seeking to buy Hungary's national airline Malev in a deal believed to be in excess of €150 million, writes Emmet Oliver.
Mr Mulcahy and a group of Irish and Hungarian investors submitted a bid for the airline last week. Five groups have made bids, but Mr Mulcahy's group and a Russian company are regarded in Hungary as having the best chance of securing the airline.
Mr Mulcahy was approached to head up the group because of his experience as chairman of Aer Lingus, according to sources close to the bid. As executive chairman, he was involved in the restructuring at Aer Lingus which included slashing fares and significantly reducing costs. Malev is suffering from some of the problems that afflicted Aer Lingus in the 1990s and post-September 11th .
Malev, which operates services out of Dublin, has built up considerable debts in recent years and the Hungarian government is expecting any buyer to take on some or all of this debt of approximately €140 million and inject fresh equity into the carrier. The actual purchase price for the airline is expected to be relatively small but the value of the deal is expected to be in excess of €150 million.
The decision by Germany's Lufthansa, one of Europe's largest airlines, not to bid for the carrier has increased the chances of a non-industry group being successful. State-owned airlines like Malev are increasingly rare in the European aviation industry, with many airlines privatised or semi-privatised over the last decade.
Irish airline Ryanair and other low-cost operators like easyJet have caused some of Malev's problems with their low fares into various Hungarian cities leaving it in the red.
Malev, with headquarters in Budapest, is a similar-sized airline to Aer Lingus with 29 aircraft. It has been state-owned for many years and several attempts have been made to privatise it. It has a mainly Boeing fleet which is among the youngest in Europe and this should prove attractive to potential buyers. It is also due to join the One World Alliance next year.
The airline has been one of the most radical carriers in eastern European aviation, casting off connections with the Soviet Union much earlier than many other airlines. Its decision in 1998 to purchase US Boeing 737s was regarded as farsighted at the time.
Among the other groups looking to purchase the airline is LAL, Lithuania's largest carrier; Sky Alliance, a group set up by Malev pilots; AirBridge, a firm controlled by Russian air industry entrepreneur Boris Abramovich; and Aviation Solutions, a consortium of Hungarian private and institutional investors supported by Canadian businessman Jozsef Gubisi.
Mr Mulcahy has a range of business interests including ownership of the Queens pub in Dalkey.