The European Union could rule that Hungary's state-owned airline Malev should pay back tens of billions of forints of state aid when it concludes a competition review next year, Development Minister Tamas Fellegi said on Monday.
European Union competition regulators opened an in-depth investigation into Malev in December 2010, saying it may have received illegal state aid.
Fellegi said the EU could publish its ruling some time next year.
"It will obviously say that Malev received forbidden public funds," Fellegi said. "Malev may have to pay tens of billions of forints back in case of a negative decision."
Hungary's attempts at selling loss-making Malev have failed and last year the government bought back all but a 5 percent stake from a group of investors, including Russia's Vneshekonombank.
Fellegi said Hungary would not sell Malev before the competition probe is finished. He added however that Budapest was in talks with unnamed European investors on forming a new carrier after talks with Chinese investors on a similar deal fell through.
"We are in talks with possible European investors. I cannot say who, as it is a publicly listed company and we try to defend their interests," Fellegi said. "These are advanced talks... we can probably strike a final deal in the spring of 2012."
The government had also held a series of talks with Chinese carrier Hainan Airlines on potential cooperation. Fellegi said that contrary to earlier reports, Hainan was never interested in buying Malev.
The Chinese wanted to form a new airline but abandoned the talks because they saw no way the deal could be beneficial to them in financial or other ways, the minister said.
The government was trying to limit the potential negative effects of the competition probe and Malev's history on any new deal, Fellegi said, adding that Hungary wanted to see a long-term investor operating a new national airline out of Budapest.