Estonian government rejects idea to privatize state-owned Nordica

Shutterstock, Renatas Repcinskas

Nordica, the national air carrier of Estonia, will not be privatized, said Taavi Aas, Estonia’s Minister of Affairs on October 9, 2020. The doubtful idea of state-owned airline’s privatization was raised after previous local media reports that the measure would be a necessary alternative in order to pay back the €30 million state aid, which was granted to Nordica as a relief from the COVID-19 effects.

On October 8, 2020, the local media reported that struggling Nordica might be privatized in a few years. The reasoning for the speculation relies on a fact that the European Commission (EU) requires the air carrier to repay the state aid of €30 million until 2027. However, it seems the airline would not be able to fulfill its obligations because currently Nordica is in negative equity.

Taavi Aas, the Minister of Affairs, gave the newest update on the government plans and denied previous talks about Nordica’s privatization.

“I can’t say we have a plan today for privatization. Our first plan today is for Nordica to survive as an airline,” speaking to local media said Aas.

“We certainly don’t have any plan to sell Nordica today, because in today’s situation there is no opportunity to do so. First, we need to get the company up and running and then make the ensuing decisions,” added the Minister of Affairs.

The Minister outlined that Nordica was an “essential as a lifeline in and out the country”. At the same time, Aas did not rule out privatization as a measure on the government agenda in the future.

Nordica received the EU Commission’s approval for €30 million state aid in August 2020. It came with conditions that the financial injection must be paid back or the airline should be privatized. To take state aid was the only option for struggling Nordica to stay afloat. The local media reported that otherwise, the airline would go bankrupt by the end of 2020. Nodica is expected to have run at a loss of €23 million ongoing year.



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