The government of Estonia has requested a mandate for the potential privatization of flag carrier Nordica, either partially or entirely, alone or in partnership with Transpordi Varahaldus, a lessor.
Minister of Climate, Kristen Michal, stated that Nordica may face either privatisation or bankruptcy, and the state will not invest more money into the carrier.
If privatisation efforts fail, Nordica may have to continue independently or face closure. The Estonian government is considering two major options for Nordica: for it to operate as a scheduled carrier to and from Tallinn, and for the company to become self-financed.
A memo from the Climate Ministry revealed that insolvency could not be ruled out as Nordica posted a loss of EUR11.9 million for the first nine months of 2023.
The memo cited issues in four areas for the poor results: detrimental contract terms, an overly complex organizational structure, improperly implemented contracts, and an overly complex fleet structure.
The company struggled to fulfill new contracts, leading to excessive expenses for preparations that exceeded revenues and resulted in the inability to meet planned volumes.
Two contracts, including one with SAS Scandinavian Airlines, are currently unprofitable for Nordica.
Management changes and the abrupt departure of Jan Palmér, CEO of Nordica and Xfly, created further challenges as it risked losing its Air Operator’s Certificate (AOC).
