Airport, Estonia, Transport
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Friday, 29.03.2024, 12:25
Estonia: Nordica to end 2020 with EUR 23 mln operating loss
The airline is in negative equity and owns no planes of its
own. The Estonian government assessed Nordica's equity at minus
19,553,000 euros as at July 16, and Nordica itself estimates it will
have lost 57 mln euros in potential revenues due to the pandemic, with a
negative cashflow of 23 mln euros.
Nordica was refused a loan by Swedish-owned SEB in
April, with the latter citing uncertainty. The airline does not own any planes
of its own, which could be used as collateral.
According to the Estonian government, it is not possible for
Nordica to get a loan from the private sector under the conditions of
the crisis affecting the aviation sector. Hence, the only way out is state aid,
as without state aid the airline would go out of business, and the company's
sustainability would be in jeopardy already before December 2020.
Nordica currently is a provider of the aircraft,
crew, maintenance and insurance (ACMI) service to other airlines, and has
signed agreements on the provision of ACMI with SAS and Polish carrier LOT.
With LOT it used to have an agreement concerning five aircraft, which the
Polish carrier has suspended until at least March 2021 citing a force
majeure.
Nordica's agreement with SAS, which was concluded for
15 planes, has been downsized to five aircraft following the outbreak of the
coronavirus crisis.
Nordica has still had to pay for its aircraft leases
as well as employees -- either those kept on or those receiving redundancy
packages, the English-language new portal of ERR said.
In 2019, before the pandemic broke, Nordica had a turnover
reported at 100 mln euros and paid 15 mln euros to state coffers in taxes,
including 1.9 mln euros in labor tax. Nordica is the biggest company in
the Estonian aviation sector. The sector itself is estimated to account for 3.5%
of the country's gross domestic product (GDP).
Before the coronavirus crisis, the company employed a
workforce of 624, and its salary levels are from 1.5 to four times higher than
the national average. By the end of this year, the number of employees at
Nordica is estimated to drop to 385.
Nordica also supports, by its operations, the work of Transpordi
Varahaldus OU, which leases aircraft for the firm, Tallinn Airport,
aircraft maintenance provider Magnetic MRO, and Airo Catering Estonia.
Nordica also is an important cooperation partner for the Estonian
Aviation Academy, whose graduates account for about one in five Nordica
employees.
The European Commission noted that air connections even
before the coronavirus pandemic struck were below European average in Estonia,
partly due to the country's location and size, with Nordica, which was founded
in 2015, having a 20% share of routes operated from Tallinn before the crisis.
Those flights were operated not under the Nordica brand, but via the ACMI
arrangement. Flying under its own brand, Nordica still had a 40% share
of routes out of Tallinn in the first half of 2019.
The European Commission agrees with the estimate that the
cessation of operations by Nordica means that it will take at
least six to 12 months before other operators can substitute for the
discontinued operations. That would mean Estonia being relegated further into
the periphery of the EU that is difficult to reach by plane.
The document also points out that the types of aircraft
leased by Nordica are suited specifically for serving an airport with
small passenger numbers like Tallinn.
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