Estonia Halts Nordica Sale Amid Unsatisfactory Bids and Financial Concerns

Estonia’s government has decided to suspend the sale of the Nordic Aviation Group (NAG), the parent company of state-owned airline Nordica, due to unsatisfactory financial offers and concerns over the terms proposed by potential buyers. Climate Minister Kristen Michal made the announcement after reviewing the binding purchase offers from two companies.

During a Cabinet meeting on April 11, Michal indicated that the offers not only fell short in financial terms but also included unsuitable conditions. Furthermore, there were issues with transparency, as one of the bidders did not provide sufficient details about the funding source for the transaction.

Despite these setbacks, the Ministry of Climate remains committed to achieving the best possible market price for NAG and will continue working with its privatisation advisor to this end. According to Deputy Chancellor for Mobility Sander Salmu, “Nordic Aviation Group will continue to operate. To achieve breakeven, the company will reduce costs and renegotiate existing contracts to enhance profitability. The aim is to stabilize the management of the company, address ongoing issues, and prepare for future privatisation.”

Salmu also noted the possibility that NAG might struggle to operate independently due to past mismanagement. However, he expressed confidence in the new management’s plans to cut back on expenditures and generate additional income, which would help sustain operations and prepare for a potential future sale, either alone or in conjunction with Transporti Varahaldus (TVH), or the independent sale of TVH itself. TVH, also state-owned, leases aircraft to NAG and is part of the privatisation plan.

Over the next six months, the Ministry of Climate and the Finance Ministry will review NAG’s terms of sale, assess restructuring needs, and explore various strategies to ensure the continuity of the airline’s operations. This process is crucial for maintaining the market value of TVH, safeguarding 314 jobs, and protecting the company’s significant tax contributions of EUR1 million per month.

Currently, Nordica operates a single A320-200 leased from Avolon, as noted in the ch-aviation fleets module. In addition to Nordica, the Nordic Aviation Group owns Xfly, a specialized ACMI provider based in Estonia, which is also included in the sale plans.