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LHV to lend Nordica EUR 25 mln for purchase of 2 planes

BC, Tallinn, 18.04.2017.Print version
The listed bank LHV is about to lend the state owned company Transpordi Varahaldus OU 25 million euros for the purchase of two CRJ 900 aircraft that will be used by Nordic Aviation Group, the Estonian air carrier operating under the Nordica brand, writes LETA/BNS.

We need to acquire two new aircraft because Nordica wishes to offer more departures from Tallinn, Nordica CFO Ahto Parl said at a press event on Tuesday. Transpordi Varahaldus will buy two CRJ900, which it will lease to Nordica, Parl said.

LHV will lend 25 mln euros for eight years by means of a bond, Andres Viisemann, chief of funds at LHV said. The interest on the loan is fixed at 2.85% for the first four years. Half of the bonds are to be subscribed by pension funds and half by the bank, Viisemann said.

The collateral for the loan is made up of four CRJ900 aircraft, which Viisemann described as a good security.

The state owned Transpordi Varahalduse finished its first financial year with a profit of 3 mln euros. The company owns four CRJ900 aircraft.

According to Parl the last few months have been remarkable from the perspective of the company. "We have been able to announce quite a few new destinations," he said. Nordica's expansion plans mostly concern the Warsaw route that the company is developing in cooperation with LOT Polish Airlines and the announcement of St. Petersburg and Goteborg routes. "Warsaw has become Nordica's major hub," Parl said.

"The aim is to switch to three flights a day," he said. "We want to offer more seats from Tallinn and a more comfortable flight schedule. We also want to transition to bigger planes step-by-step. Transpordi Varahaldus is currently renting us four CRJ900 and soon hopefully six," Parl said.

"We are certain that Nordica, who will be entrusted with the two new planes, is being built reasonably. Every bigger step is made only when it is certain that that step will be economically beneficial and will improve both the position of Nordica and Estonian aviation," Viisemann said in a press release. "This is exactly the kind of transaction we would like to make with pension funds more often."

Parl said that one of the planes will be flying in Nordica's own route network and the other will start service on LOT Polish Airlines' routes. One of the existing CRJ700 will be replaced by a bigger CRJ900 and the smaller plane will be kept as a standby plane at Tallinn airport.

"Nordica's fleet of aircraft and the volume of flights has increased to such an extent that it is economically reasonable to own our own standby plane. This will further increase the quality and stability of our services and help to cut back on expenses," Parl said.

Under the agreement, the first plane will arrive in Tallinn in June and the second one in July. Both aircraft will start operating at the beginning of August the latest. This transaction marks the biggest ever involvement of commercial capital in Estonian aviation.

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