Minister: State does not need to support Nordica any further

A turboprop aircraft in Nordica livery.
A turboprop aircraft in Nordica livery. Source: Anna Zvereva/Creative Commons

Minister of Economic Affairs and Communications Taavi Aas (Center) confirmed that state airline Nordica's acquisition of subsidiary Xfly came at no cost to the taxpayer. Aas added that if Nordica acts reasonably going forward, the state does not have to support the company any more.

At the end of 2020, Nordica signed a deal with Polish airline LOT, buying out LOT's minority stake in the joint venture of Xfly (formerly Regional Jet). The Polish leaving the deal was a precondition for the Estonian state allocating €22 million into Nordica's stock capital to alleviate coronavirus damages.

Minister of Finance Martin Helme (EKRE) said the companies cooperated in netting claims and according to the deal, LOT was to pay €1.7 million, but it is not known if the Polish airline did so.

"There are three main contracts with LOT and each of them have separate promises and commitments made to each other. There were different commitments criss-cross and requirements put on one another. Potentially, the capacity of our requirements was around €5.5 million, the Poles said they have at least as many against us. It was a matter of principle, which requirements we will consider and how some conditions were calculated," Helme said.

Minister of Economic Affairs and Communications Taavi Aas said the contract is confidential, but did confirm the deal with LOT did not cost anything to the taxpayer.

"The aid we gave out is estimated to take place in the middle of next year, considering how succesfully Nordica can operate, perhaps even longer," the minister said.

Aas added that Nordica has acted in a very reasonable manner and if the company proceeds to do so in the future, the state does not need to aid the airline any more.

The injection of state aid came with a condition of Nordica repaying the money in seven years or becoming privatized. Aas said there is no point talking of privatization before the situation in aviation normalizes.

"Looking at the situation today, an optimistic estimation would be that air traffic would get its feet under it by summer of next year and forward from then. I think there is no reason to talk of any great changes before 2022 or 2023," Aas noted.

In August, the European Commission finally authorized the Estonian government to support Nordica with €30 million to help the airline cope with the difficulties caused by the coronavirus.

Nordica employs over 100 people. The European Commission forecast its 2020 losses at €23 million, a figure which company CEO Erki Urva says is overstated.

"The loss will not be that great, but it will definitely be bigger than last year. It is hardly any wonder as we went from having 24 aircraft in the air to having none or just a singe one. /…/ But it should not exceed €20 million," Urva said in late-November.


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Editor: Kristjan Kallaste

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