Hungary Blocked Budapest Airport From Emergency Covid-19 Funds

The Hungarian government blocked Budapest Airport from accessing emergency Covid-19 funding, according to two people familiar with the matter.

Due to a dramatic drop in air traffic related to the coronavirus pandemic, the airport had applied for a 50 million-euro ($58 million) short-term loan from the European Bank for Reconstruction and Development through its “Solidarity Package” program.

The request for support came amid job cuts at the international hub as air traffic collapsed by more than 99% this spring. Last month, Bloomberg reported that Budapest Airport Zrt. was the subject of an unsolicited purchase offer by allies of Prime Minister Viktor Orban.

The funding, requested to stabilize the airport’s financial situation, ensure business continuity and pay obligations such as salaries, was vetoed by the Hungarian government in May, when it instructed the decision-making body of the EBRD to remove the application from the agenda, one of the people said.

The second person said it was “extraordinary” for a government to block investment into its own country and may have the affect of pushing down the valuation of a strategic asset. The EBRD has provided lending support to other airports in the region.

When asked about the airport’s request for support being blocked by Hungary, the development bank said “no comment.” The Hungarian government didn’t respond to a request for comment.

A consortium including partially state-owned oil refiner Mol Nyrt. mandated Daniel Jellinek, the head of a local real-estate development company Indotek that did business with Orban’s family this year, to approach the airport’s owners.

Jellinek acknowledged the talks after Bloomberg published its report on the offer, without providing further details. No details about the amount offered nor Orban’s exact role in the process have been disclosed.

Orban has made no secret of his interest in returning the international flight hub, which was first sold to private owners in 2005, to state control. But its high valuation has long kept it out of the government’s reach.

The pandemic has changed that. The airport said in April that it had lost almost all of its air traffic that month compared to the previous year and a reduction in headcount was “inevitable.” In September it announced 236 job cuts.

The airport’s three owners -- GIC, Singapore’s sovereign wealth fund, a Canadian pension fund and AviAlliance, an airport management company that in turn is owned by another Canadian fund -- have no current plans to sell the airport, which was one of the world’s fastest-growing mid-size hubs before the pandemic.

Jellinek’s Indotek, which this year bought the stake of Orban’s son-in-law, Istvan Tiborcz, in a listed real-estate company, has recently been expanding its portfolio. Last month the company bought a 24% stake in the road haulage firm Waberer’s International.

©2020 Bloomberg L.P.

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