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. Last Updated: 07/27/2016

Airbridge Closes In on Malev Purchase

MTKrasAir chief Boris Abramovich, right center, alighting from a plane at the Sky Express launch at Vnukovo on Monday.
Airbridge, an investment group affiliated with Russian airline consortium AiRUnion, will complete a deal to buy the beleaguered Hungarian national airline Malev within the next few months, KrasAir CEO Boris Abramovich said.

AiRUnion is an alliance of five Russian airlines, headed by KrasAir.

"Negotiations will be completed in February or March," Abramovich said during the launch at Vnukovo Airport of Russia's first low-cost airline Sky Express, a venture he helped mastermind.

His comments followed an announcement Friday by Hungarian privatization agency APV that the only remaining rival bidder, Lithuania's LAL airlines, had been turned down over doubts about the company's financial guarantees.

"Total investment in the project will be 50 million euros [$65 million] over the medium-term, three to five years," said Abramovich, refusing to specify how much Airbridge would pay overall.

The overall deal for Malev is estimated to be worth 160 million euros, which will cover clearing the airline's outstanding liabilities and new investment in the company, Kommersant reported Friday.

Airbridge intends to pay back Malev's debts over ten years and make the airline profitable within two years, Kommersant reported, citing sources close to company.

The deal for Malev would see Airbridge acquiring the airline's fleet of 27 aircraft, mostly revamped Boeing 737 jets, and establishing a vital European hub in Budapest.

"It's a good move, as they'll now be able to enter the European market," said Yelena Sakhnova, an aviation analyst at Deutsche UFG.

The negotiations constitute Airbridge's second attempt to buy Malev, after a previous deal for the airline fell through in August 2005 when the Hungarian government pulled the plug on the tender following objections from trade unions. Before the current sale can go ahead, it must receive government approval.