The move is another step towards the full privatization of Nordica.

Following a government decision to exit businesses aimed at generating profit but without public purpose, the government decided in early March to divest the state's shares in Nordic Aviation Group (NAG), and with it the Nordica airline.

For the same reason, it was deemed unjustifiable to maintain the state's stake in Transpordi Varahaldus, which wet-leases aircraft to Nordica.

The ownership decision confirmed by the Ministry of Climate on Monday stated: "Transpordi Varahaldus has reinvested its earnings into capital assets."

"The activity of profit generation is not strategically necessary for the state as an owner, which is why the owner has decided to fully exit the aviation business, including through the sale of Transpordi Varahaldus or its assets, followed by the company's eventual liquidation," the statement went on.

This means that Transpordi Varahaldus is obliged to make preparations to initiate the sale process by the end of the second quarter of this year – ie. by the end of June, and to map out the most profitable sale options.

Climate Minister Kristen Michal (Reform) said: "The company must aim for sustainable and profitable operations when conducting business transactions until successful privatization."

Earlier this month, Michal extended the terms of Transpordi Varahaldus board members and also hiked their remuneration.

Board chair Maigi Pärnik-Pernik's monthly stipend rose from €500 to €700, while board members Ave Henberg and Raoul Lättemäe's saw theirs rise by €200, to €500 each.

The Ministry of Climate justified this decision by citing the increased role of the board during the upcoming privatization.

In early April, Minister Michal recommended the government halt negotiations with the two companies that had bid for NAG.

Michal said that one offer was financially insufficient, while the other contained additional conditions found to be unacceptable.

The latter bidder also failed to provide adequate information about the origins of the capital proposed to be used in the bid.

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