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Estonia courting seven Nordica suitors in state airline sale

ETV's
ETV's "Pealtnägija" interview with Nordica CEO Remco Althuis, with a Nordica jet visible in the background. Source: Vladlen Pobjaržin

The Ministry of Climate has contacted seven potential suitors in Europe over the sale of the Estonian state-owned airline Nordica – and plans on reaching a preliminary agreement in the transaction with at least one of them next month.

"Initial materials were sent out to the interested parties before Christmas, and we'll be awaiting more detailed feedback in the first weeks of January," Sander Salmu, undersecretary for mobility and transport at the Ministry of Climate, told ERR. "The process has gotten a bit more formal."

While November and December were spent meeting with potential interested parties, according to Salmu, Superia, the company advising on the sale of the airline, has now sent initial info to seven potential suitors.

If a company is interested in buying Nordica, then the Ministry of Climate is ready to follow up with additional and more precise info – including, upon signing a confidentiality agreement, granting access to their data hub as well as meeting, he explained.

According to the ministry official, all seven potential buyers are European companies.

"We started with those who are active in Europe and are familiar with the field – so that we wouldn't have to start explaining from scratch, so to speak, what Europe is and how aviation works here," he added.

Nordica is struggling currently. Despite earning a net profit of €1.5 million on an annual revenue of €90.6 million last year, in the first nine months of 2023,
the Estonian flag carrier posted a consolidated net loss of €11.9 million.

According to Salmu, the state has no intention of putting any more taxpayer money toward the airline, and once the company has been sold, the additional capitalization thereof will be up to the new owner to decide. If Nordica can't be sold within the next few months, however, it may not be able to continue operations.

"We cannot rule out the difficult decision to shut down the company," he acknowledged.

The Climate Ministry is prepared to sell off the company either as a whole or in parts – such as by selling regional flight subcontracting subsidiary Regional Jet, which operates under the Xfly brand, separately from Nordic Aviation Group (NAG). Transpordi Varahaldus, the separate but likewise state-owned company that owns and leases the jets Nordica flies to the airline, is not currently actively for sale, although the Estonian state intends to privatize the latter as well.

Salmu said that the timeline for the sale of Transpordi Varahaldus has not yet explicitly been determined, however once Nordica has been sold, the government should settle the former rather quickly.

"Preparations will definitely begin over the next year," he noted. "But yes, there's no timeline for that exactly, but there's no reason for us to wait on moving forward with the sale."

Special audit still in works

In addition to being actively on the market, Nordica is also still undergoing a special audit expected to provide answers regarding what went wrong with the airline.

The Ministry of Climate received the audit in brief in the second week of December, and according to Salmu, the audit didn't turn up anything particularly surprising or new.

"There was no need to adopt some kind of new decision at a general meeting, for example, but this is the first comprehensive report," he said. "We'll wait for the final results, and won't rule out that some kind of decisions will still have to be made on the basis thereof."

The ministry official likewise wouldn't rule out Nordica possibly submitting any claims against its previous management, should the final report recommend doing so.

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Editor: Aili Vahtla

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