Nordica receives approval for €30 million state-aid package


Nordica, the national air carrier of Estonia, received approval for governmental support which would include a state-guaranteed loan of €8 million as well as capital back-up by €22 million.

On October 15, 2020, local media reported that Taavi Aas, the Minister of Economic Affairs responsible for Nordic Aviation Group activities, received the governmental permission to formalize a state aid package to Estonian air carrier straight after discussions among LOT Polish Airlines (LOT) and Regional Jet OU, a subsidiary of Nordica would conclude. The negotiations between two companies involve LOT’s intentions to give up its stake in Regional Jet OU’s.

In August 2020, the European Commission allowed the government of Estonia to support Nordica with a maximum of €30 million state aid package. Erki Urva, the Chair of the Management Board of Nordica, said that the package would help the airline survive the COVID-19 crisis.

“This [support package] will mostly go to pay off debts that have developed. Let’s just say that the European Union would not have given a state aid permit to a company that was in trouble before the crisis. So we did very well, we had concrete hopes to finish this year with solid turnover,” speaking to local media said Urva.

Following the government decision, Nordica and Kredex, a financing institution owned by the state, would start negotiations on an €8 million government-backed loan agreement. However, the exact date of forthcoming negotiations has not been announced yet. 

Meanwhile, Nordica counted that due to air travel restrictions it would lose a total of €22 million. In order to keep the company afloat, the government would cover the air carrier’s expected losses through the share capital. Urva outlined that one of the main European Commission’s conditions raised for granting a state aid package for the airline was that the state must either recover the aid from the company within 7 years or leave the company.

The condition was met with speculation about the state-owned airline’s privatization. However, the Minister of Economic Affairs rejected the idea and claimed that the government had no plans to privatize Nordica.

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