September 2, 2010 / 1:58 PM / 9 years ago

UPDATE 1-Malev gets new cash injection to stay afloat

* HUF 5.7 bln loan ensures Malev remains viable - ministry

* New plan targets breakeven on operating level in mid-term

(Updates with ministry confirmation)

BUDAPEST, Sept 2 (Reuters) - Hungary’s loss-making national airline Malev [MALV.UL] got a 5.7 billion forint ($26 million) emergency cash injection from the state to pay for aircraft leases, the development ministry said.

The weekly Figyelo said earlier on Thursday that Malev had trouble paying U.S. company International Lease Finance Corporation (ILFC) on time for the lease of its fleet.

Figyelo cited one unnamed source as saying Malev had overdue debt worth about 3 billion forints to ILFC.

“Without the 5.7 billion forint assistance, Malev’s situation would have become almost completely unsustainable,” the National Development Ministry told Reuters.

It said the new loan, used primarily to pay obligations under the lease contract with ILFC, also ensured that the airline — which was renationalised by the previous Socialist government in February — remained viable.

“The February state action and the funds approved in April ... have temporarily resolved liquidity problems,” the ministry said. “However, changes are needed in the airline’s operation and efficiency as this system is unsustainable in the long run.”

The ailing carrier received a total 9.2 billion forints worth of fresh loans from the state this year, Figyelo reported, citing Zoltan Kamaras, who represents the Hungarian National Asset Manager (MNV) on the board of Malev.

The airline, which has been struggling with financing over recent years, posted a loss of 24.4 billion forints in 2009 according to figures published on its website. ($1=222.15 Hungarian Forint) (Reporting by Gergely Szakacs; Editing by Sharon Lindores)

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