The government will not allocate additional funding for the struggling airline Nordica and is pushing for privatization or closure, Minister of Climate Kristen Michal (Reform) told ERR. Additionally, €14.4 million will be given to Tallinn Airport on the agreement it will not increase its fees.
"It is appropriate to underline that the situation of Nordica is very difficult. It is already common knowledge that Nordica's expansion plans, made in the past, led to the company's decline. The board is trying to get the damage under control on an ongoing basis, their indication to us today is that the situation has been better in September, on balance, however, it is still very complicated," Michal said on Wednesday, commenting on the company's €11.9 million loss over the last nine months.
The ministry has initiated a review of the company's activities and management decisions which is due later this month.
"The proposal of the managers who left the company at the time of the crisis to resolve the situation was to put more taxpayers' money into the company, which I and the government do not support because keeping a company that does not fly out of Estonia is not a strategic undertaking," the minister said.
Michal said the company should be privatized or closed down, which is also the assessment of the National Audit Office.
"We have also asked the government for a mandate to do so, and together with the Ministry of Finance we are taking steps to stress that the state of business is difficult and that expectations should be lowered immediately," he said.
Michal said the government is planning to give additional money to Tallinn Airport instead, but with the clause that airport fees will not increase next year.
"As a country, we will continue to invest in air connectivity – in the coming years, we will invest an additional €14.4 million in Tallinn Airport to maintain and develop the air connections that are essential for Estonia's people and economy. This additional funding also includes an agreement that airport charges will not increase in 2024, which will improve Estonia's competitive position," he said.
Kallas: Nordica's current form does not solve any strategic problems
Last week, when answering MPs questions in the Riigikogu, Prime Minister Kaja Kallas (Reform) also said that Nordica in its current form does not solve any strategic problems that the Estonian state.
She also said it should be privatized.
"What is in Estonia's own interest is to have as many flights as possible out of Tallinn Airport in the morning, back in the evening, to different locations, so that people can get around. Therefore, supporting the airport to attract those routes here is more important than keeping an airline that flies absolutely nowhere from Estonia," said Kallas.
Editor: Helen Wright