Court ruling is upheld in Budapest Airport privatisation

The Court of the Capital City upheld the appealed ruling of the first instance labour court and declared the privatization tender for Budapest Airport invalid. ÁPV Rt., the state organ in charge of privatization is to call for new tender and has already commenced consultation with employee representatives as required by the Court.

29 August 2005 the Budapest Labour Court cancelled the privatisation tender of the Budapest Airport Co (Budapest Airport Rt) on grounds that the management had failed to inform and consult with the works council appropriately prior to issuing the tender invitation by the owner Hungarian Privatisation and State Holding Company (Állami Privatizációs és Vagyonkezelő Rt, ÁPV Rt). (HU0509101F). On the appeal filed by the Budapest Airport Co., the Court of the Capital City (Fővárosi Bíróság) as second instance court heard the case urgently. 22 September it upheld the ruling of the first instance labour court and declared the privatization tender for Budapest Airport invalid again. Therefore the whole tender process has to be restarted.

Following the court decision, ÁPV Rt. in its announcement stressed that it had observed all stipulations of Act XXXIX of 1995 on Privatisation, and had directly informed employee representatives the same way as in all other privatisation cases of the recent decade. In ÁPV Rt’s opinion, nobody at ÁPV Rt. or at Credit Suissse First Boston (CSFB), the consultancy firm in charge of the preparations of the privatisation deal, made a mistake. In their view, this judgement contradicts previous court rulings on similar issues, therefore ÁPV Rt will initiate a process at the Supreme Court of Hungary (Legfelsőbb Bíróság, LB) to pass a decision to ensure the unity of the law ('jogegységi döntés') i.e. an order of the Supreme Court to be followed by lower courts in later processes in order to assure a unified interpretation of laws. According to the latest news, the state organisation in charge of privatization has already initiated consultation with employee representatives as required by the latest ruling.

According to the 2005 business plan of ÁPV Rt., Budapest Airport has to be privatised by the end of the year. ÁPV Rt. is expected to issue a new invitation for tender soon to the five prospective buyers, who were already selected in the previous process. ÁPV Rt. and the government expect more than HUF 400 billion (EUR 1.6 billion) of revenues from the transaction as well as infrastructure development and 3,000 new jobs at the privatised airport.

The end of the year deadline is of great importance for the Government as it must reduce the huge deficit of the current budget. The FIDESZ-Hungarian Civic Alliance (FIDESZ - Magyar Polgári Szövetség, FIDESZ-MPSZ), the main opposition party, has been heavily attacking the government for the budget overspending. It also objects the privatisation policy of the government in general, and the sale of the pieces of 'crown jewellery' of state property, such as the Budapest Airport, in particular.

In the meantime, the bargaining round for a new collective agreement in early September produced a compromise at the airport. As it is known, trade unions staged a two hour warning strike causing the delay of about 15 flights on 5 September. (HU0509101F) The new agreement, signed 11 September, stipulates a 17% annual rise for this year in basic wages and a package of social welfare benefits worth HUF 417,000 (EUR 1,700) for each employee. In exchange, trade unions accepted the company’s plans for contracting-out certain ground services and the airport minibus service, which had been a hotbed of disputes between the management and the works council for a long time. (HU0401101N) The agreement can not be terminated in the coming three year period.

This information is made available through the European Industrial Relations Observatory (EIRO), as a service to users of the EIROnline database. EIRO is a project of the European Foundation for the Improvement of Living and Working Conditions. However, this information has been neither edited nor approved by the Foundation, which means that it is not responsible for its content and accuracy. This is the responsibility of the EIRO national centre that originated/provided the information. For details see the "About this record" information in this record.

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