Estonia’s national airline, Nordic Aviation Group, is on the brink of bankruptcy. As the company’s financial situation worsens, government officials and executives are exploring ways to avert the crisis. Sander Salmu, Deputy Secretary General for Transport at the Ministry of Climate and a member of Nordic Aviation Group’s Supervisory Board, stated that bankruptcy would be inevitable if the company fails to secure new customers or privatize soon.
Termination of SAS Contract Endangers the Company
Flights operated within Sweden by Nordic Aviation Group’s subsidiary, Regional Jet, will cease at the end of October with the expiration of its contract with SAS. This critical development is seen as a sign of the company’s looming financial collapse. The management and supervisory board are hopeful of finding new clients to rescue the company’s future. However, Salmu has openly acknowledged the difficult situation, stating that the ministry has been aware of the bankruptcy risk for nearly a year.
Salmu emphasized the severity of the situation by saying, “A bankruptcy decision will be made by the board if the company can no longer continue operations.” The company’s management is expected to present a plan outlining Nordica’s future on October 15.
Privatization Plans for Nordica
While efforts are being made to privatize the company, it is noted that a high sale price should not be expected. Salmu remarked, “Our goal is to ensure the company continues operating in Estonia. Nordica is an export-focused service company that generates tax revenue. However, we should not expect the state to make significant economic gains from this process.”
According to the current plan, only Nordic Aviation Group and its subsidiaries are set to be sold, while Transpordi Varahaldus, which owns the aircraft, will remain under state ownership. Apart from a few aircraft owned by Nordica, the company lacks substantial assets, with its true value lying in its services, customers, and employees.
Uncertain Future for Nordic Aviation Group
Nordic Aviation Group has been operating as a charter airline and Estonia’s flag carrier from 2016 to 2023. The company ended its scheduled flights to Sweden as of October 2023 and is currently trying to sustain its operations through wet lease agreements with other European airlines. However, the company’s future remains uncertain, and the coming weeks are critical.
The Estonian government is considering all options to keep the airline afloat, taking into account Nordica’s contributions to the local aviation sector and the country’s economy.
