Climate ministry ends talks with companies bidding for Nordica
Minister of Climate Kristen Michal (Reform) on Thursday proposed the government end negotiations with two companies that had submitted offers to purchase Nordic Aviation Group (NAG). The company will continue its operations, but its costs will be reduced.
After analyzing the proposals, the Ministry of Climate decided to stop the sales process.
The ministry said the offers were financially insufficient, contained conditions unsuitable for the seller, conditions deemed unacceptable to the shareholder, and one company did not provide adequate information about the origin of the capital used for financing the deal.
"The Nordic Aviation Group continues to operate. In order to recover, costs will be reduced, existing contracts will be renegotiated to improve their profitability. The aim is to keep the business stable, solve problems and reach privatization," said Sander Salmu, undersecretary for mobility and transport at the Ministry of Climate and a member of NAG's board.
Nordica's situation also affects the state-owned company, Transport Asset Management (ransporti Varahaldus/ TVH), which leases aircraft to Nordica.
"It is still possible that NAG will not be able to manage on its own due to past mismanagement, but the cutbacks and additional revenue plans made by the management of the company will allow it to continue operations and to prepare for a new sale of the company, either separately or in conjunction with TVH, or for a sale of TVH on its own," Salmu said.
Nordica is continuing its operations and is preparing for a new privatization process with an advisor. The sales conditions and restructuring possibilities will be assessed by the climate and fiance ministries before the new privatization.
Multiple European companies have expressed interest in purchasing Nordica, but their names are kept confidential.
The climate ministry said continuing NAG's operations also ensures the highest possible market value for Transport Asset Management, which leases aircraft to the company.
NAG was founded in October 2015 primarily to ensure flight connections from Tallinn, provide competition in the aviation market, and operate sustainably.
In 2019, Nordica ceased flights from Tallinn due to changes in the competitive situation that made their operations unprofitable. The company still employs 314 people in Estonia.
NAG includes the airlines Nordica and Xfly, and the consulting service company Nordic Aviation Advisory OÜ. The group is 100 percent owned by the Estonian state.
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Editor: Karin Koppel, Helen Wright
