On Thursday, Nordic Aviation Group announced that the contract its subsidiary Regional Jet, which operates under the Xfly brand, has with SAS for serving domestic routes in Sweden will be terminated at the end of October.

According to Sander Salmu, deputy secretary general for transport at the Ministry of Climate, the ministry has been aware for about a year that the company is in a difficult position and bankruptcy could happen at any time.

"Ultimately, bankruptcy is a decision made by the management board if it becomes clear that the company can no longer continue operating," Salmu told ERR.

With the contract with SAS ending in November, there is still hope that Nordica's management will be able to secure new customers.

Salmu noted that the management and the supervisory board have agreed that the management will present a plan on October 15 outlining the future of the company.

"In broad terms, work continues to find new customers. The government is talking to a potential investor with whom negotiations have been ongoing," Salmu explained.

Despite the end of the SAS contract, one European-based investor remains interested in the airline's privatization, according to Salmu.

However, he admitted that the state should not expect a high price for Nordica.

"We should not set expectations that the price level will be very high or that there will be a significant economic benefit for the state. Rather, our aim is for the company to continue operating in Estonia. It is an export-oriented service company that also generates tax revenue for Estonia. The goal is to preserve an Estonian aviation company," Salmu said.

As per the current plan, only the Nordic Aviation Group and its subsidiaries would be sold, while Transpordi Varahaldus, which owns the aircraft, would remain state-owned.

Salmu did not specify how long Nordica's liquid assets would last after the termination of the SAS contract. He mentioned that the company doesn't possess much in terms of assets.

"Nordica doesn't have significant assets directly. It has a few aircraft, but their value is not particularly high. In service companies, the main value typically lies in their customers, employees and the services they provide, not in their assets," Salmu explained.

No decisions will be made before mid-October. "We are currently waiting for the management's plan and vision for the company's future on October 15. Yes, bankruptcy is a scenario, but first, we will wait to hear the management's perspective," Salmu remarked.

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