Hungary has changed the terms of the failed privatization for national airline Malev, to make it more attractive to investors, saying a buyer could bid initially for part of the shares and reducing the debt it would have to assume.

"Investors do not have to assume all of Malev's debt and they do not have to bid for all the stock offered," government Spokeswoman Boglar Laszlo told a news conference on Wednesday.

Investors have to commit however to buying the rest of the shares later, Laszlo added.

She also said that assuming more of the debt will be considered an advantage in any bid process.

Hungarian privatization agency APV cancelled the tender Malev on 18 November after receiving only one bid, from Aviation Solutions International, a consortium headed by a former Malev chief executive, which failed to meet its basic requirements.

The agency had asked potential investors to retain all employees, assume the Malev's debt of 36.2 billion Hungarian forints (USD$197.7 million) and to bring in domestic investors in order to maintain Malev's status as national carrier.

APV did not release the terms of the bid, but local media reported that Aviation Solutions offered just 150 million forints and would not assume the 36 billion forint debt.

Malev could still receive aid of 3 billion forints (USD$16.4 million) in cash from the Hungarian government, but any further aid is unlikely due to stringent European Union rules.

But Malev is well positioned in a market that is set for rapid growth. Industry experts say that less than 5 percent of Central Europeans fly each year, compared with a figure close to 25 percent in Western Europe.

(Reuters)