Will Hungary's newest airline Solyom fly?

By bne IntelliNews August 1, 2013

Kester Eddy in Budapest -

Solyom Hungarian Airways, a new and decidedly "patriotic" Magyar airline, is to take delivery of six leased airliners by the end of September, initially to fly between Budapest and major European capitals. The new carrier will also be seeking to re-establish Budapest's role as a hub for Eastern and Southeast Europe, the airline's spokesperson tells bne, though some question whether the whole venture will fly.

Despite a massive increase in low-cost and traditional carriers flying to Budapest in the wake of the collapse of Malev, the nation's former flag-carrier, early last year, these new flights are overwhelmingly point-to-point operations, meaning the Hungarian capital has lost it's hub function serving destinations such as Tirana, Chisinau, and the capitals of the Yugoslav successor states.

"First we plan to fly major capital cities of the EU, especially major hubs like London, Paris, Frankfurt, Amsterdam, Rome, Brussels, Zurich and Stockholm. Then we would like to extend our destinations with Central-Eastern Europe, Mediterranean, Middle East and Gulf Region," says Solyom's Tamas Hevizi, director of communication.

Hevizi said he was "sure" that Solyom "can restore the positions of the former national airline, because we will have transfer connections which has been disappeared after Malev collapse. We have a strategic cooperation with Budapest Airport which has the biggest potential in Central and Eastern Europe."

The nascent carrier said it would take delivery of six Boeing 737-500 aircraft within the next two months via a "multi-year" lease contract with a company called European Aviation Limited (EAL).

Solyom - the name means "falcon" in Hungarian, although the airline prefers to translate the word as "hawk" - has ambitious targets. In a press release issued on July 24, it revealed ambitious plans to fly to 31 destinations this year, expanding to 51 in 2014 and fully 96 destinations in 55 countries "around the world" by 2017. Emphasising its role as a traditional, rather than no-frills carrier, it envisages a fleet of 50 aeroplanes, comprising 20 regional, 20 narrow-body and 10 wide-body jets, by 2017.

Asked for details, Hevizi says: "We calculated for start-up; AVRO RJ 85/100 regional jets, for narrow body we will use Boeing 737 Classic and Airbus 319/320/321 family. For wide body, Airbus 330 or Airbus 340 preferred." He added that "after 3 years," Solyom plans to replace its used fleet with "regional CRJ or Embraer 175/195, narrow body Boeing 737Max or Airbus 320/321NEO and Airbus 350." The list price of the fifty aeroplanes would total €4bn, he asserts.

Questions of finance

Quite how this operation will be financed, however, is far from clear.

According to its press release, Solyom is currently owned by three Hungarian businessmen, chief executive Jozsef Vago, Robert Hurtyak and Janos Lucsik.

The airline also said it has concluded agreements with two strategic investors, an unnamed "tourism enterprise," registered in Muscat, Oman, and a "well-capitalised investor with extensive international relations, registered in Dubai, UAE... with... financial resources necessary for the development of the airline." Hevizi declined to reveal any further financial details to bne.

If successful, the new carrier would provide a huge boost to Budapest, re-establishing the city as regional centre with excellent flight connections. However, the reactions among air professionals has bordered on incredulity - hardly surprising given that Hungary's ailing economy was unable to support Malev, which at the time of its demise was operating just 22 aircraft and served some 50 destinations.

Asked for his comments on Solyom, Jozsef Varadi, chief executive of Wizz, the regional low-cost carrier, said it would be "more profitable to sell sand in the desert than to start a new airline in the EU," according to Hungarian media.

Eli Abeles, a London-based airline consultant, commenting on the initial choice of Boeing 737-500 jets, says "these are old, noisy and very fuel thirsty. They may be cheap to buy or lease, but I wouldn't start an airline today with those aircraft."

The Hungarian media also appear to view the launch with suspicion - the daily Nepszabadsag writing that the Hungarian transport authority had turned down Solyom's application for an air operators certificate (AOC), an essential paper for commercial passenger flights. The authority would also examine the financial background to the airline, the paper wrote.

Solyom said that none of its applications has been rejected by any authority so far.

In another twist, European Aviation Limited, a UK-based company, failed to respond to an emailed enquiry by bne asking for confirmation of the leasing deal announced by Solyom. According to its website, EAL has just three B737-500s available for lease.

Abeles, however, noted that any leasing deal with European Aviation might mean Solyom planned to "piggy-back on the EAL air operator's certificate," although such a cross-border arrangement would be "unusual," he added.

Solyom, which expects to take on between 700 to 1,000 employees this year, says it would be recruiting staff from August 1. "The Hungarian Conquest is just beginning as you read this. The registration mark on the first airplane is HA-SHA... named after the Grand Prince of the Magyars, Álmos, who was the first head of the Hungarian tribes. Others will follow very soon," the press release concluded.

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