Taivo Linnamägi, head of the aviation department at the Ministry of Climate, told ERR that the reason for ending the year with a negative result was the impact of Nordica's financial difficulties on the value of Transpordi Varahaldus' assets.

This forced a reassessment of the value of aircraft owned by Transpordi Varahaldus.

Linnamägi said: "In the light of international accounting standards, the Transpordi Varahaldus management board chose to reassess the fixed assets value, namely the aircraft."

"Consequently, the accounting loss for the last fiscal year amounted to €10.6 million," he added.

The state still plans to privatize Transpordi Varahaldus, and Linnamägi added that preparations are underway.

"The state's aim is to obtain the best possible market price from the sale. As a result the owner in May set as an expectation for Transpordi Varahaldus' preparations towards initiating the company's sales process in the second quarter, and to map out the most profitable sales opportunity. The company has begun amassing offers," he went on.

Transpordi Varahaldus reported a loss of €10.6 million in 2023.

While rental services generated sales revenue also of €10.6 million, aircraft depreciation costs amounted to €9 million.

More significantly, losses from the write-down of fixed assets, specifically aircraft came to €12.4 million.

Linnamägi noted that without the write-down of fixed assets, Transpordi Varahaldus's net profit last year would have been €1.8 million, while sales revenue from leasing aviation assets rose by €2.1 million on year, he said.

The Transpordi Varahaldus annual report states that 2023's losses will be covered from retained earnings from previous years.

Linnamägi added Transpordi Varahaldus regularly checks and reassesses the value of its fixed assets - at the end of 2022, the company gained €9.7 million in accounting profit from this asset revaluation.

Last year's special audit of Nordica revealed that the company's financial difficulties were due to poor management. In late February, the prosecutor's office launched an investigation to determine whether Nordica's management had breached trust, leading to the company's financial troubles.

In 2022, Transpordi Varahaldus earned €9.7 million in profit, with rental service sales revenue at €8.5 million, and the value of fixed assets remained unchanged.

Depreciation costs in 2022 were almost half what they had been in 2023.

Transpordi Varahaldus' fleet consists of seven Bombardier CRJ900NG aircraft leased on a long-term basis to Nordica, while their operations are managed by Nordica's subsidiary, Regional Jet.

Regional Jet in turn provides airline operation services to its clients (Nordica, SAS) under the Xfly brand.

Transpordi Varahaldus was founded in October 2015 and primarily engages in leasing aircraft and aircraft-related spare parts.

The company has no registered employees on payroll, and management services are procured from the open market. It is managed by two board members, Ergo Blumfeldt and Tõnis Tamme, who have signed board member agreements with the company.

Additionally, a management services agreement has been signed with law firm Triniti.

The company is also overseen by a three-member supervisory board.

Nordica's report still under preparation

Nordica's own annual report for the past year has not yet been submitted.

The company's board said the audit process has taken longer than expected due to the analysis of the financial difficulties noted above, Linnamägi said.

The government still plans to privatize Nordica.

The first attempt this year failed: Two companies submitted binding bids but the Ministry of Climate decided to halt the sales process, after analyzing and refining the offers.

Both Transpordi Varahaldus and Nordic are 100 percent owned by the Estonian state.

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