Government approves transfer of shares in state-owned Nordic Aviation Group

The government approved the transfer of state shares in Nordic Aviation Group (NAG) at a meeting on Thursday.
A government decision authorizes the Minister for Climate to transfer 100 percent of the state's shares in Nordic Aviation Group.
"The state will transfer 400,000 shares with a nominal value of €10 each, the value of the shares to be determined by competitive bids. The state is selling Nordica because the company provides outsourced services and there is no reason to expect that the company could start to provide air services from Tallinn. Therefore, the company has no strategic interest for the Estonian state," the government's order states.
Prime Minister Kaja Kallas (Reform) said at a government press conference that the existence of air connections from Estonia is important for the government.
"The special audit has shown that not everything has been working properly and that Nordica is not fulfilling this task. If these assets and contracts have value, it makes sense to use this value for the benefit of the Estonian state and to use this money to attract new connections here or airlines that fly from here to other parts of the world, so that we have as many connections as possible," she said.
"The company currently provides outsourcing services and this is not a strategic activity for the Estonian state," the prime minister added.
When the company was established in 2015, its main objectives were to ensure air connections from Tallinn, create competition in the aviation market and operate in a commercially sustainable manner.
In almost eight years, the fate of the company has changed significantly on several occasions. The first major change in the company's operations took place in 2019, when NAG stopped flying from Tallinn, as the competitive situation had changed by then with the arrival of international airlines in Tallinn, making it no longer viable to compete.
Subsequently, both NAG and the aviation industry as a whole were struck by the COVID crisis in 2020, the impacts of which were lessened by the airline receiving governmental aid in October 2020, one of the requirements of which was that the company must not operate loss-making routes.
Given the current market situation for airlines at Tallinn Airport, the state aid ban means that NAG will not be able to operate flights to and from Estonia, the government said.
Climate Minister Kristen Michal (Reform) said the week before last that binding offers and then the privatization process could be reached in early March.
A special audit of the state-owned airline, commissioned by the Ministry of Climate and conducted by consulting firm EY and law firm Fort, revealed that the company's troubles were the result of mismanagement.
Nordic Aviation Group AS was established by a government decision in September 2015. Michal was minister of Economy and Infrastructure at the time. The company consists of the airlines Nordica and Xfly and the consultancy company Nordic Aviation Advisory OÜ. The group is wholly owned by the Estonian state.
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Editor: Kristina Kersa