Headlines

The Hungarian government decreed Monday that troubled national airline Malev Zrt was a company of "strategic importance" in a move to shield the state-owned company from bankruptcy, Dow Jones DBR Small Cap reported. The government's move came as the airline's chief executive, Lorant Limburger, said in a statement that Malev lacked the funds to continue operating beyond the end of January. Malev held an emergency board meeting earlier Monday.

The Schleckers, once one of Germany's wealthiest families, have lost their multi-billion-euro fortune, they said on Monday, leaving them unable to pump fresh funds into the insolvent Schlecker drugstore chain, Reuters reported. Schlecker, which competes with privately held chains Rossmann and dm, filed for insolvency last week, putting about 30,000 jobs at risk, as struggling European businesses find it increasingly hard to secure funds against a gloomy economic backdrop.

Greece's Alpha Bank, the country's third-largest lender by assets, said Monday it was freezing plans to merge with cross-town rival EFG Eurobank Ergasias SA pending further details over a EUR100 billion debt write-down Greece is now negotiating with creditors, Dow Jones reported. In a statement issued to the Athens stock exchange, the bank said it would call a meeting of shareholders to seek fresh approval for the tie-up. It hinted that the debt talks--known as the Private Sector Involvement--could overturn the financial benefits of the deal.

Angela Merkel, the German chancellor, is facing growing political pressure at home to demand stricter fiscal discipline from her eurozone partners at an extraordinary European Union summit in Brussels on Monday. She also faces a potential revolt by conservative members of the German parliament over any call for more taxpayers’ money to bail out the ailing Greek economy.

President Nicolas Sarkozy monopolized French TV airways Sunday evening to announce measures aimed at improving the country's competitiveness, as well as his economic record, three months ahead of the spring presidential election, The Wall Street Journal reported. To help safeguard industrial jobs, Mr. Sarkozy said his government would shift part of social welfare costs from companies onto consumers by reducing payroll taxes and increasing the value-added tax—a levy similar to sales taxes in the U.S.—to 21.2% from 19.6%.

A new downturn for the Spanish economy has led to a sharp escalation of its unemployment rate, data showed Friday, lending new urgency to Prime Minister Mariano Rajoy's plans to overhaul one of the region's largest ailing economies, The Wall Street Journal reported. According to Spain's National Statistics Institute, the number of jobless Spaniards rose by 295,300 in the fourth quarter from the third, to 5.27 million. That is equal to 22.85% of the work force, compared with 21.52%, more than twice the average unemployment rate of 10% for the 27 members of the European Union.

China's Premier Wen Jiabao said the nation's government debt is at an "overall safe and controllable" level, that funding for key projects would be ensured and that applying the brakes to the economy would be done in a way to avoid systemic risks, Reuters reported. Wen's comments, reported in the official People's Daily on Monday, were made in a speech dating back to early January at the government's flagship financial work conference. Wen pledged to contain and defuse local government debt risks and avoid the spread of financial risks.

Sweden's Debt Office has paid back loans the European Investment Bank made to Saab, making the Nordic country the bankrupt car firm's biggest creditor, Reuters reported. The Debt Office guaranteed Saab's original 400 million euro ($526 million) loan from the EIB, of which the carmaker used 217 million euros. Shares in Saab Automobile Parts and Saab Automobile Tools held as collateral by the Debt Office are worth more than the loan, it said.

Spanair SA, the Spanish airline involved in a crash that killed 154 people in 2008, ceased operations after Qatar Airways Ltd. halted takeover talks and the regional government refused to provide further funding, Bloomberg reported. The final flight landed at about 10 p.m. Friday, the Barcelona-based carrier said in an e-mailed statement, citing “a lack of financial visibility for the coming months.” The closer may affect as many as 23,000 passengers this weekend and will see 120 flights canceled, spokeswoman Sandra Melendez said.

Is the “end of the euro” over? Among political and business leaders gathering in Davos for the World Economic Forum’s annual meeting, the talk seems to be have shifted away from doomsday forecasts of an imminent euro collapse, the International Herald Tribune reported. Instead, the debate is now focusing on the best way for the euro zone to weather an economic downturn and whether it can emerge stronger from the ordeal. Leaders like Chancellor Angela Merkel of Germany are displaying a renewed will to preserve the common currency and are appearing more united.