Government endorses share capital increase for Tallinn Airport
The Estonian government on Thursday authorized Minister of Economic Affairs and Infrastructure Taavi Aas (Center) to decide on increasing the share capital of state-owned airport company AS Tallinna Lennujaam by €20 million to €45.6 million by issuing two million new shares with a nominal value of €10.
As a result of the negative impacts of COVID-19, the investment capacity of AS Tallinna Lennujaam has decreased. Thus, the purpose of increasing the share capital is to enable the company to move forward with necessary investments, spokespeople for the government said.
The increase in share capital will allow to finance the investments of the first stage of the development of the southern area of Tallinn Airport and to improve the company's borrowing capacity by significantly improving the equity/debt ratio.
Based on an analysis, the investment does not qualify as state aid, so there is no obligation or need to notify the European Commission.
The economic affairs minister must make use of the investment conditional on a preliminary assessment of the statistical office of the European Union to define the transaction as a financing transaction.
Due to COVID-19, the whole world, including the European tourism and transport sector, was significantly affected in the first half of 2020 as a result of extreme travel restrictions. In March-April 2020, air traffic volumes decreased by approximately 80 percent compared to the same period in 2019, the ministry said in remarks accompanying the draft decision.
Air traffic volumes gradually recovered in the third quarter of 2020, but the expected increase in volumes has not materialized. In 2020, Tallinn Airport served a total of 863,585 passengers, about half of whom used the airport in the first two months of the year. The last time a similar number of passengers passed through Tallinn Airport was in 2003.
In comparison, passengers in 2019 numbered 3.26 million.
It needs to be noted, though, that the number of flights fell less than the number of passengers in 2020. In total, almost 23,000 flight operations took place at Tallinn Airport last year, which equals 48 percent of the 2019 level.
In addition to Tallinn Airport, the biggest airport in Estonia, AS Tallinna Lennujaam operates six regional airports across Estonia.
Tallinn Airport CEO: Aircraft maintenance, cargo operations have great potential
Commenting on the government's approval of the increase in the share capital of AS Tallinna Lennujaam, the state-owned airport company's CEO Riivo Tuvike said that the greatest potential for increasing the airport's own income lies in the expansion of aircraft maintenance and air cargo operations.
The CEO said that in order to overcome the crisis, it is necessary to continue with strategically important investments which have a long-term positive impact.
Tuvike described aircraft maintenance and air cargo operations as an important area for the Estonian economy and the aviation sector. "We want to contribute to our tenants' expansion plans and invest €43.5 million in the first phase of the development of the southern part of Tallinn Airport," the CEO said.
The aim of the first phase is to develop the air cargo and aircraft maintenance infrastructure at Tallinn Airport. Of the total investment of €43.5 million, €7.3 million is intended for the construction of infrastructure and €36.2 million for the construction of buildings for rent for the provision of cargo handling and aircraft maintenance services.
The first phase of the development will be carried out in 2021-2024 using state investment and borrowings. In the course of the project, the infrastructure related to the development of the plots and the buildings related to the goods handling service will be built.
"Post-Covid, we are in a situation where it is necessary to continue investing in future developments throughout the economy," economic affairs minister Taavi Aas said. "Tallinn Airport is part of a larger plan, which also includes the development of railways within Estonia, Rail Baltic, 2+2 roads, etc."
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Editor: Kristjan Kallaste