Estonia Approves Privatisation Strategy for State-Owned Airline Nordica

The Estonian government has officially endorsed the privatisation of Nordica, the national carrier fully owned by the state, signaling a significant shift in the country’s aviation strategy. This approval paves the way for the Ministry of Climate, which oversees the airline, to initiate the sale process of 400,000 government shares in the Nordic Aviation Group, Nordica’s parent company. The shares, each valued notionally at EUR10, will be transferred through a competitive bidding process, aimed at determining the shares’ market value.

This strategic decision stems from the government’s assessment that Nordica no longer contributes to enhancing Estonia’s connectivity, as the airline has ceased operating flights from Tallinn under its own brand and lacks a viable plan to resume such services. The Estonian state has consequently deemed its ownership of Nordica unnecessary, prompting the move towards privatisation.

The privatisation process has already attracted preliminary interest from seven potential buyers, as confirmed by the Ministry of Climate. These expressions of interest remain non-binding, with the government anticipating the submission of binding bids by early March. Climate Minister Kristen Michal has highlighted the urgency of the situation, indicating that the future of Nordica hinges on either successful privatisation or potential bankruptcy. This follows an audit by EY, which attributed the airline’s dire financial predicament to poor management practices.

Currently, Nordica’s operational fleet consists of a single A320-200 aircraft, which is being operated on behalf of Bamboo Airways. The privatisation will also separately address the sale of Xfly, an ACMI specialist under the Nordic Aviation Group, as part of efforts to resolve the group’s financial challenges.

The Estonian government’s decision to privatise Nordica marks a critical juncture for the airline, opening a new chapter that could redefine its role in the global aviation market. As the privatisation process unfolds, stakeholders within and beyond Estonia will closely monitor the transition, eager to see how this strategic move will influence the airline’s operations and Estonia’s broader aviation landscape.