Sale of Estonian Air Could Cost State €90 Million Minus One Euro (2)

Bombardier CRJ900 NextGen Photo: Postimees/Scanpix
11/5/2014 3:33 PM
Category: Economy

The sale of state-owned national airline Estonian Air to the owners of shipping company Tallink could mean that the state will lose 90 million euros it has previously lent to the company, and could only net a symbolic one euros, the weekly newspaper Eesti Ekspress speculated on Wednesday.

The weekly wrote that the state had offered Estonian Air to many foreign airlines and entities, including Hong Kong's flag carrier Cathay Pacific, as well as companies in Latvia and Lithuania, but all have declined or asked for more state funding. Some have also proposed unacceptable conditions, such as Kazakhstan Airlines proposing to fly to Astana five times a day.

The state has supported Estonian Air with 77.6 million euros, and will add another 12 million in the near future, but the company has little assets besides the trademark and contracts with airports. The current fleet has been purchased with loans, the weekly wrote.

Ain Hanschmidt, the head of Infortar's supervisory board, the company wishing to purchase Estonian Air, has apparently not used word “buy” in connection with Estonian Air, but “taking over” and “investing,” with Eesti Ekspress calculating that Infortar will have to invest tens of millions in euros into the company, as a requirement.

Hanschmidt and Enn Pant, the other owner of Infortar and CEO of Tallink, have a plan how to improve Estonian Air's fortunes, although they are yet to unveil motivation behind the move for the national flag carrier. The weekly claimed that one scenario is to offer flights for Asian tourists from Helsinki or Tallinn to other European locations. Last year, around 170,000 Asians traveled on Tallink ferries and according to plan, they could be offered forward flights as well as boat trips. Another idea is to take on Scandinavian regional routes, in a similar way Tallink has done on the Baltic Sea ferry routes.


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