Estonian gov’t praises Nordica, confirms €30mn aid

The Estonian government has confirmed that it will inject EUR22 million euros (USD27 million) into the share capital of flag carrier Nordica (EE, Tallinn Lennart Meri) and will additionally transfer a loan of EUR8 million (USD10 million), economy minister Taavi Aas revealed at a press conference. Aas said he had received authorisation from the government to provide the Covid-combating state aid, which already has the blessing of the European Commission. The package will be formalised once discussions on acquiring LOT Polish Airlines’ 49% stake in Nordica’s ACMI/charter subsidiary Xfly (EE, Tallinn Lennart Meri) have concluded. He said at the December 3 news briefing, as quoted by bne IntelliNews: “As a result of a discussion in the cabinet today, the specifications will be clarified and I very much hope that an additional session of the government will take place [soon] in which the allocation of funds will be decided.” He added: “Nordica has found a niche and is offering strong competition with its presence. With this support, it can recover better and stronger.” According to chief executive Erki Urva, a revised Nordica business plan scraps the virtual carrier’s planned launch of an initial batch of 12 scheduled routes from Tallinn Lennart Meri. Nordica still aims to commence scheduled operations, he said, but the specific dates and times are not yet clear. “This [package] will mostly go to pay off debts that have developed. Let’s just say that the European Union would not have given a state aid permit to a company that was in trouble before the crisis. We were doing very well, we had concrete hopes to finish this year with a solid turnover,” Urva said. One condition for the rescue is that the state must exit the company or recover its investment within seven years. However, there are no plans for the moment to privatise Nordica. In an interview with Estonian broadcaster ERR on December 11, Aas revealed that he had signed a draft agreement on the transfer of LOT’s stake to Nordica, expressing the hope that the Polish side would sign it by the end of the year. During the summer, Nordica was criticised in Estonia for being in no hurry to open routes from Tallinn. Now, however, this decision can be seen as the right one, as Latvian competitor airBaltic (BT, Riga) has suffered significant losses in comparison with Nordica, the minister said.