Former Nordica CEO: No one foresaw spike in demand

Jan Palmer and Kristen Michal.
Jan Palmer and Kristen Michal. Source: Siim Lõvi/ERR

Jan Palmer, who quit as Nordica's CEO a day before its special audit was ordered, said that it was impossible to foresee problems now plaguing the entire sector last year, and that he was just as surprised by the firm's situation.

Palmer initially announced plans to resign in June and hand over to the airline's new CEO at year's end. But Nordica's poor financials saw him pull out in July.

"It has been a major problem in the aviation sector that many airlines, suppliers and aircraft manufacturers were forced to downsize in the coronavirus crisis or simply saw their employees quit the sector. It was already a problem in 2021 and 2022, while demand exploded in 2023. People wanted to fly more, airlines wanted more aircraft and crews. This caused a lot of problems as spare parts are in short supply," Palmer told ERR.

He said that many flights were canceled because the planes could not be fitted with spare parts.

Asked whether the risks could have been foreseen last year, Palmer said no one expected demand to spike. "The problem is the same for the entire sector. Unfortunately, we are not the only airline with this problem. Once you see the outcome, it's easy to say plans should have been different, while it did come as a surprise," he said.

However, the former CEO suggested that loss could not have taken the supervisory board and owners by surprise in July as Nordica had been in the red since January. The airline's supervisory board chair David O'Brock said on Tuesday that first quarter loss was planned because of the low season, which Nordica hoped to offset during the peak season starting in May.

Palmer said that the supervisory board was up to speed since January and received monthly reports. "We had problems in January and then in February. It continued from one month to the next. July was the first month when we had our planes in the air and operating on schedule," he said.

The CEO added that while he planned to retire toward the end of the year, he decided to leave early once he realized the supervisory board was planning to bring a new team on board. "There was no need for me to continue."

Palmer said that Nordica's business plan is still viable and that the airline turned a profit in the past two years.

"The firm also has new long-term contracts that should help stabilize the situation. I have no doubt that the concept works. This part of the market is growing and developing rapidly. The most important thing is to keep the aircraft flying for our customers. That is the main problem," Jan Palmer said, adding that Nordica has a good market position should Estonia decide to privatize the airline in the future.

Minister: Nordica has seen both bad luck and poor management

Estonia's Minister of Climate Kristen Michal said in an interview to "Aktuaalne kaamera" news on Tuesday that the airline has been both unlucky and plagued by poor management.

Contrary to Palmer's claims, Michal said that the supervisory board and the public believed things were going well at Nordica until recently and that it only turned out in July this was not the case. According to the minister, the airline's management board did not brief the general meeting on the difficulties. "I would say those claims aren't strictly accurate and perhaps something has gotten lost in translation."

Michal suggested Nordica fell victim to its overly ambitious expansion plans where it failed to keep catering to new clients the airline was taking on. "And contracts that were supposed to generate revenue turned into expenses instead," he remarked.

He also said that Nordica has had some bad luck in the form of damaged planes or spare parts not arriving on time. "But there is also poor management, failure to plan every step. We will probably get an overview and answers from the special audit."

Michal reiterated his previous message that the government does not plan to pour more taxpayer money into Nordica, especially seeing as it is not operating flights out of Tallinn, and that the airline must save itself. "If they can pull it off, the company will be privatized. In the long run, I do not feel it is something the taxpayer should own and maintain."


Follow ERR News on Facebook and Twitter and never miss an update!

Editor: Marcus Turovski

Hea lugeja, näeme et kasutate vanemat brauseri versiooni või vähelevinud brauserit.

Parema ja terviklikuma kasutajakogemuse tagamiseks soovitame alla laadida uusim versioon mõnest meie toetatud brauserist: