ETV: State setting up Estonian Air replacement 'just in case'

Photo: ERR
9/15/2015 11:30 AM
Category: Economy

The state is founding a new national carrier just in case the European Commission rules the aid to Estonian Air was illegal, meaning the company would go bankrupt.

State-owned Estonian Air was on the verge of bankruptcy a few years ago, until the state handed the company tens of millions of euros. The company did record a profit this summer, the first since 2010, but does not have the funds to return state aid if the European Commission rules against Estonia, ETV reported.

The state has currently set aside 40.7 million euros for the new company. If Brussels rules in favor of Estonia, that money will go to Estonian Air, which will, in turn, use it to pay back the money given to it before. If EC's decision is unfavorable, then the money will be used to build up a new airline.

“If we look at the experience of a slightly distant neighboring country, if a capital-city-based airline disappears, the air connections worsen," Economy Minister Kristen Michal said. "If we look at Estonia's economy and business interests as a whole, how regional bus and train companies receive over 20 million euros each per year, and ferries 16-17 million euros annually, then it is in Estonia's interests to keep connections open,” he explained.

The state will be the sole share-holder of the company, although private investors could be welcomed later.

The company will initially buy in services, but will later have its own fleet.

Michal said the government is yet to decide what happens to people who have purchased Estonian Air tickets, adding that everything will be seen to when the time comes.

Estonia and Estonian Air have been waiting for a decision by the European Commission for the past three years. Rumors have suggested a ruling could come this fall, although there has been little indication the Commission will make a decision in the near future.

J.M. Laats

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