Former AIB chief executive and Aer Lingus chairman Tom Mulcahy has lost out in the race to acquire Hungarian airline Malev.

Mr Mulcahy is heading up a consortium that is believed to include several Irish investors and entrepreneur Ofer Hava. But a statement this week from Hungary's assets sales agency indicated that Mr Mulcahy's group was out of the running.

Debt-laden Malev is now likely to be owned by a company called Airbridge, a local investment vehicle for Kras Air owner Boris Abramovich, and Lithuanian airline owner LAL Investiciju Valdymas. This group has been regarded as the frontrunner for several weeks now and Mr Abramovich is believed to have submitted a well-financed bid. His Kras Air is the fifth-largest carrier in Russia.

It was selected for preferred bidder status by Hungary's asset sales agency. Also losing out in the bidding were a group of former Malev employees who set up a consortium known as Sky Alliance.

Hungary invited bids last September and this is its seventh attempt to offload the airline over recent years. During previous sales exercises, unions and politicians had accused the asset sales agency of selling the airline too cheaply.

Malev, founded just after the second World War, has suffered because of low-cost competition from the likes of Ryanair and EasyJet.