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Estonian carrier Nordica preparing for privatization of business area

A Nordica press conference.
A Nordica press conference. Source: (ERR)

Estonian state-owned carrier Nordica, officially known as Nordic Aviation Group AS, is working on a plan aimed at privatizing one more of its business areas, daily Postimees wrote.

Unlike the previous Estonian state-owed carrier Estonian Air, which ran all airline operations as a single entity, Nordica runs three areas of business — aircraft ownership, aircraft operation and commercial operations — under as many separate companies.

According to Nordica CEO Jaan Tamm, this helps hedge against risks and find partners more easily.

Nordica does not own a single aircraft; rather, its fleet belongs to the state-owned company Transpordi Varahaldus OÜ, from which the carrier leases six Bombardier CRJ900s.

The entity responsible for the operation of flights is the Nordica subsidiary Regional Jet OÜ, 49 percent of which belongs to Polish state-owned carrier LOT. Regional Jet holds the permits to fly, employs flight crews and is in possession of the rest of the aircraft used by Nordica. In addition to Nordica flights out of Tallinn, Regional Jet also operates flights for SAS, LOT, and municipalities in Sweden and the Netherlands.

It is the third business area, which consists of marketing, ticket sales and organizing of tours, where a private sector partner is planned to be brought in, according to Tamm. Nordica is planning to set up a separate company within the next year that would take over its existing marketing and sales units.

"Effectively, the new business would be like a travel agency, which orders flights, does the pricing and marketing, and works with customers," the airline CEO described. "Ideally, the potential partner should have a profile such as this."

One thing that is certain at this point is that the potential co-owner would not be responsible for aircraft or flight operations; cooperation would be handled in the same way as is currently being done with LOT in developing Regional Jet. Things have been the same with Transpordi Varahaldus as well, which is working together with the financial partner LHV, the latter of which finances the purchases of aircraft.

If everything goes as planned, Nordic Aviation Group would become a holding company in the future, whereas its different business areas would be operated by individual companies partially belonging to private owners. The holding company would be responsible for general management, organization of cooperation within the group and necessary support services, Postimees said.

Editor: Aili Vahtla

Source: BNS

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