"Hungary's debt-ridden state-owned railway company MÁV is to incur consolidated losses of HUF 27 billion this year, considerably down from last year's HUF 83 bn, Miklós Kamarás, President of MÁV told a parliament committee on Wednesday.Kamarás attributed the smaller expected loss to a “turnaround" in the past years, which was consequence of changes in government and management philosophies, mfor.hu has reported.
The Hungarian state bailed out MÁV with HUF 116.7 bn this year and extended HUF 184.1 bn in the form of cost reimbursement and consumer price subsidies, Kamarás said. He added that instead of “self-pitying" and “resentfulness", MÁV management started to seek out new financial sources.
He noted that despite the turnaround, MÁV's debt still exceeds HUF 400 billion.
MÁV CEO István Heinczinger said the future of the company hinges on how successfully it can modernise itself. Sources for the rejuvenation of MÁV will be sought not only in the purse of the state, but also on the money market and higher revenues, he added.
MÁV is considering a HUF 75-100 bn bond issuance with 15-yr maturity and hopes to save some HUF 5-10 bn on reshuffling internal processes. Personnel expenditure, which make up some 45% of total costs, cannot be lowered for the time being, as such reduction would be made possible only as modernisation goes forward, Heinczinger noted. MÁV will conceive a 25-year railway programme and also come up with a three-year strategy in 2008."
Source: Portfolio Online Financial Journal
07.12.2007